<PAGE>
As filed with the Securities and Exchange Commission on January 25, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------
ROHN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
----------------
Delaware 3441 36-3060977
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
6718 West Plank Road
Peoria, Illinois 61604
(309) 697-4400
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------
Timothy W. Kirk, Esq. John H. Bitner, Esq.
ROHN Industries, Inc. Bell, Boyd & Lloyd
6718 West Plank Road Three First National Plaza
Peoria, Illinois 61604 Chicago, Illinois 60602
(309) 697-4400 (312) 807-4306
(Name, address, including zip code, and telephone number,
including area code, of agents for service)
Copies to:
Dennis M. Myers, Esq.
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
(312) 861-2000
----------------
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the Registration Statement becomes
effective and all other conditions to the merger of PiRod Holdings, Inc. with
and into the Registrant pursuant to the Agreement and Plan of Merger described
in the enclosed Proxy Statement/Prospectus have been satisfied or waived.
If any of the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
Proposed maximum
Title of each class of Amount maximum aggregate Amount of
securities to be to be offering price offering registration
registered registered per share(1) price(1) fee
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<S> <C> <C> <C> <C>
Common Stock, $.01 par
value.................. 7,648,106 shares $3.125 $23,900,331 $6,645
</TABLE>
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(1) Estimated pursuant to Rule 457(c) solely for the purpose of calculating the
registration fee required by Section 6(b) of the Securities Act of 1933 and
based upon the reported closing sale price of the Registrant's common stock
on the Nasdaq National Market on January 19, 1999.
----------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
PROXY STATEMENT/PROSPECTUS
PROPOSED MERGER--YOUR VOTE IS VERY IMPORTANT
The Board of Directors of ROHN Industries, Inc. (which we refer to as
"ROHN") has approved a merger agreement providing for PiRod Holdings, Inc.
(which we refer to as "PiRod") to merge with and into ROHN via a Delaware
statutory merger. The Board of Directors of PiRod has likewise approved the
merger agreement.
Be sure to read the "Risk Factors"
beginning on page 13.
Here is what you should expect to receive if the transaction is completed:
ROHN Stockholders:
. At your election, you may choose to retain any or all of your ROHN shares or
you may choose to receive $3.78 in cash per share for any or all of the ROHN
shares that you own.
Depending on the amount of cash available, up to 27,777,777 (approximately
52.6%) of the outstanding ROHN shares will be converted into cash and the
rest will be retained. Based on the current intention of ROHN's majority
stockholder to elect to cash out all of its ROHN shares, it is expected that
the available cash will be prorated among all ROHN stockholders electing
cash, with non-cashed ROHN shares retained.
PiRod Stockholders:
. Each outstanding share of PiRod class A common stock will be converted into
3.7282 ROHN shares and each outstanding share of PiRod class L common stock
will be converted into 61.6859 ROHN shares.
ROHN shares are traded on the Nasdaq National Market (under the symbol ROHN)
and are expected to continue to be so traded after the merger, although
approximately 38% fewer ROHN shares will be outstanding. Assuming that the
merger is completed, the stock ownership percentages of outstanding ROHN shares
would be:
<TABLE>
<CAPTION>
ROHN PiRod
Stockholders Stockholders
------------ ------------
<S> <C> <C>
Following completion of the merger.................... 76.6% 23.4%
</TABLE>
We based these percentages on the number of shares of each company
outstanding on February 1, 1999 and assumed that 27,777,777 ROHN shares would
be cashed out in the merger.
We are asking ROHN stockholders to approve:
. The merger agreement, approval of which is necessary to permit the
transaction to occur.
. The election of ten nominees to the ROHN Board of Directors.
. The ROHN 1999 Stock Option Plan.
This proxy statement soliciting votes of ROHN stockholders also constitutes
a prospectus for the ROHN shares to be issued to PiRod stockholders.
Your Vote Is Important. Please vote on these proposals by completing and
mailing the enclosed proxy card, even if you plan to attend the ROHN
stockholders meeting. Also, you should read this document carefully before you
vote. It provides detailed information about the proposed merger and the other
matters needing your approval. You may obtain more information about ROHN from
documents that we have filed with the Securities and Exchange Commission.
Neither the Securities and Exchange Commission nor any state securities
regulator has approved or disapproved the ROHN shares to be issued in
connection with this document or determined if this document is accurate or
adequate. Any representation to the contrary is a criminal offense.
February , 1999
<PAGE>
PROPOSED MERGER -- ROHN INDUSTRIES, INC. and PIROD HOLDINGS, INC.
We encourage you to read the full text of the enclosed proxy
statement/prospectus. Here are some highlights.
. ROHN Industries, Inc., and PiRod Holdings, Inc., propose to combine via a
Delaware statutory merger of PiRod into ROHN.
. ROHN and PiRod are each principally engaged in the business of making and
selling telecommunications towers and related equipment. In the first nine
months of 1998, ROHN reported net sales of $128.5 million, and PiRod reported
net sales of $40.8 million in that period.
. In the merger, PiRod shares will be converted into shares of ROHN and ROHN
shares will either be retained or converted into the right to receive $3.78
in cash, at the election of ROHN stockholders.
. Depending on the amount of cash available, up to 27,777,777 (approximately
52.6%) of the outstanding ROHN shares will be converted into cash and the
rest will be retained. The UNR Asbestos-Disease Claims Trust, the holder of
29,348,051 ROHN shares (approximately 55.5% of those outstanding), has
announced its intention to elect cash for all its shares. If it does so and
the merger occurs, there will be proration of the available cash among all
stockholders electing cash, with any non-cashed ROHN shares retained.
. ROHN will pay the cash portion of the merger consideration from cash on hand
and new borrowings made by ROHN at the time of the merger, after which ROHN
will be substantially more leveraged.
. There are certain risks to ROHN stockholders (which will include PiRod's
former stockholders) after the merger, including ROHN's substantial leverage
and the possible lower liquidity of its shares as the result of a smaller
public float. See "Risk Factors" beginning on page 13.
. Each outstanding share of PiRod class A common stock will be converted into
3.7282 ROHN shares and each outstanding share of PiRod class L common stock
will be converted into 61.6859 ROHN shares.
. ROHN shares are traded on the Nasdaq National Market (under the symbol ROHN)
and are expected to continue to be so traded after the merger, although
approximately 38% fewer ROHN shares will be outstanding following the Merger
if 27,777,777 ROHN shares are cashed out. PiRod shares are not publicly
traded.
. The merger requires the approval of the holders of a majority of the
outstanding shares of ROHN and PiRod. Holders of a majority of shares of both
companies have agreed to vote to approve the merger, subject to certain
conditions.
. An annual meeting of ROHN stockholders has been called for Monday, March 22,
1999, at which the merger agreement and an employee stock option plan will be
submitted for approval and ROHN directors will be elected.
. The boards of directors of ROHN and PiRod have each unanimously approved the
merger agreement and recommend to their stockholders that they vote for its
adoption.
. Donaldson, Lufkin & Jenrette Securities Corporation, financial adviser to
ROHN and to its principal stockholder, have advised that, based on the
matters referred to in their opinion, they believe the consideration package
which ROHN stockholders may elect to receive and/or retain in the merger is
fair to ROHN stockholders from a financial point of view.
. An Election Form is enclosed for ROHN stockholders who wish to receive cash
for all or part of their shares. Please read it carefully and follow its
instructions if you want cash, subject to proration. To receive cash, you
must return your properly executed Election Form to the Exchange Agent by
5:00 p.m., New York City time, on Friday, March 19, 1999.
. This proxy statement soliciting votes of ROHN stockholders also constitutes a
prospectus for the ROHN shares to be issued to PiRod stockholders.
<PAGE>
ROHN Industries, Inc.
February , 1999
To the Stockholders of ROHN Industries, Inc.:
An annual meeting of stockholders of ROHN Industries, Inc. has been called
for Monday, March 22, 1999 to, among other things, consider the approval and
adoption of an Agreement and Plan of Merger between ROHN Industries, Inc. and
PiRod Holdings, Inc. If the Merger Agreement is approved by the stockholders of
ROHN and PiRod and certain other conditions are met, PiRod will be merged into
ROHN and ROHN will be the surviving corporation (the "Merger").
In the Merger, you may choose to retain any or all of the ROHN shares that
you own or you may choose to receive $3.78 in cash per share for any or all of
the ROHN shares that you own, provided that the maximum number of ROHN shares
to be cashed out will be determined by dividing the cash available from
borrowings and cash on hand by $3.78, but in no event more than 27,777,777 ROHN
shares will be so cashed out. The UNR Asbestos-Disease Claims Trust, the holder
of 29,348,051 ROHN shares (approximately 55.5% of those outstanding), has
announced its intention to elect cash for all its shares. If it does so and the
Merger occurs, there will be proration of the available cash among all
stockholders electing cash, with any non-cashed ROHN shares retained. ROHN
stockholders not electing to receive cash will retain their ROHN shares. PiRod
shares will be converted into a total of approximately 7.65 million ROHN
shares.
Your Board of Directors has unanimously approved, and recommends that you
vote FOR, the Merger. Donaldson, Lufkin & Jenrette Securities Corporation,
financial adviser to ROHN and to its principal stockholder, has rendered an
opinion to the effect that, as of the date of the opinion and based upon
matters described therein, the consideration package which ROHN stockholders
may elect to receive and/or retain in the Merger is fair to ROHN's stockholders
from a financial point of view.
In this document, we describe in detail the proposed Merger, its background
and other relevant information. Also described are proposals for the election
of directors and the adoption of an employee stock option plan. A proxy
solicited by the Board of Directors of ROHN in connection with the Annual
Meeting is enclosed herewith.
Also enclosed is an Election Form for you to complete and return with your
ROHN share certificates if you elect to receive cash for any of your ROHN
shares in the Merger (subject to proration). In order to properly elect to
receive cash, your Election Form, together with your ROHN share certificates,
must be received by First Chicago Trust Company of New York, the Exchange
Agent, by the close of business on Friday, March 19, 1999.
You should carefully consider all of the material in this document and
execute and return the enclosed proxy as soon as possible, whether or not you
expect to attend the Annual Meeting. Your giving a proxy will not prevent you
from voting in person at the Annual Meeting.
Cordially,
Brian Pemberton President and Chief Executive Officer
Gene Locks Chairman of the Board
<PAGE>
ROHN Industries, Inc.
6718 West Plank Road
Peoria, IL 61604
(309) 697-4400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held March 22, 1999
An annual meeting of stockholders of ROHN Industries, Inc., a Delaware
corporation ("ROHN"), will be held at , Chicago, Illinois, on
Monday, March 22, 1999, at 10:00 a.m., Chicago time, for the following
purposes:
1. To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated as of December 22, 1998 (the "Merger
Agreement"), between ROHN and PiRod Holdings, Inc. The Merger Agreement, a
copy of which is attached as Appendix A to the Proxy Statement/Prospectus,
provides for the merger of PiRod Holdings, Inc. with and into ROHN on the
terms described therein.
2. To elect ten directors to serve either until the next annual meeting
of stockholders or until their respective successors are duly elected or
appointed (as the case may be) and qualified.
3. To consider and vote upon approval of the ROHN 1999 Stock Option
Plan, a copy of which is attached as Appendix B to the Proxy
Statement/Prospectus.
4. To consider and transact such other business as may properly be
brought before the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on February 1, 1999
as the record date for determining which stockholders of ROHN will be entitled
to notice of, and to vote at, the annual meeting.
By Order of the Board of Directors,
Timothy W. Kirk
Secretary
February , 1999
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Summary................................................................... 1
Risk Factors.............................................................. 13
Possible Reduced Liquidity of ROHN Shares................................ 13
Leverage and Debt Service Requirements................................... 13
Significance of Telecommunications Industry Success to ROHN.............. 13
Principal Stockholders................................................... 13
Competition.............................................................. 14
Fraudulent Transfer Considerations....................................... 14
Risks Associated with Merger............................................. 15
Introduction.............................................................. 16
General.................................................................. 16
Record Date; Voting Rights; Vote Required................................ 16
Proxy Solicitation....................................................... 16
Proposal 1 -- The Merger.................................................. 18
General.................................................................. 18
Background of the Merger................................................. 18
Recommendation of ROHN's Board of Directors; ROHN's Reasons for the
Merger.................................................................. 20
Opinion of ROHN's Financial Adviser...................................... 22
Recommendation of PiRod's Board of Directors; PiRod's Reasons for the
Merger.................................................................. 26
Financing................................................................ 28
Capitalization of ROHN and PiRod and Exchange of Shares.................. 30
Election Procedure....................................................... 31
Management of ROHN after the Merger; ROHN Stockholders Agreement......... 31
Director/Officer Liability Insurance and Indemnification................. 33
Interests of Certain Persons in the Merger............................... 33
No Solicitation.......................................................... 33
Voting Agreements........................................................ 33
Certain Federal Income Tax Consequences.................................. 34
Appraisal Rights......................................................... 37
Accounting Treatment..................................................... 37
Conditions for Merger and Other Provisions............................... 37
Termination; Termination Fee............................................. 38
Expenses................................................................. 39
Treatment of Options and Warrants........................................ 39
Antitrust................................................................ 40
Business of ROHN.......................................................... 40
General.................................................................. 40
Telecommunications Equipment Market...................................... 40
Products................................................................. 41
Patents and Trademarks................................................... 41
International............................................................ 42
Customers and Backlog.................................................... 42
Competition.............................................................. 42
Raw Materials............................................................ 42
Employees................................................................ 43
Environmental Matters.................................................... 43
Properties............................................................... 43
Description of ROHN Capital Stock......................................... 43
PiRod Common Stock........................................................ 44
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Business of PiRod......................................................... 44
General.................................................................. 44
Products and Services.................................................... 45
Customers and Backlog.................................................... 46
Suppliers................................................................ 46
Property and Employees................................................... 46
PiRod Management's Discussion and Analysis of
Financial Condition and Results of Operations............................ 47
Unaudited Pro Forma Condensed Combined
Financial Statements..................................................... 52
Historical Financial Statements of PiRod.................................. 60
Proposal 2 -- Election of Directors....................................... 89
Nominees for Director.................................................... 89
Background Information Regarding Nominees................................ 89
Directors' Compensation.................................................. 91
Board Meetings; Board Committee Functions and Composition................ 91
Executive Officers....................................................... 91
Management Compensation.................................................. 92
Compensation Committee Report on Executive Compensation.................. 95
ROHN Stock Performance Graph............................................. 97
Employment Contracts and Other Agreements................................ 97
Transactions with Management............................................. 99
Beneficial Ownership of ROHN Shares....................................... 100
Compliance with Section 16(a) of the Securities Exchange Act of 1934...... 101
Proposal 3 -- Approval of The 1999 Stock Option Plan...................... 101
Experts................................................................... 103
Stockholder Proposals; Other Matters...................................... 104
Where You Can Find More Information....................................... 104
Appendix A -- Agreement and Plan of Merger dated as of December 22, 1998,
between ROHN Industries, Inc. and PiRod Holdings, Inc.
Appendix B -- ROHN 1999 Stock Option Plan
Appendix C -- Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation
</TABLE>
<PAGE>
SUMMARY
This Summary highlights certain significant matters discussed in this Proxy
Statement/Prospectus and may not contain all of the information important to
you. To understand the transaction and the other proposals described herein,
you should review carefully the entire Proxy Statement/Prospectus (including
the Appendices and the documents incorporated herein by reference). Also, see
"Where You Can Find More Information," page 104.
General Information
ROHN Industries, Inc...... ROHN Industries, Inc., a Delaware corporation,
is principally engaged in making and selling
tubular telecommunications towers, enclosures
and related equipment. The address of its
principal executive offices is 6718 West Plank
Road, Peoria, Illinois 60604, phone: (309) 697-
4400. See "Risk Factors" and "Business of ROHN"
for certain information relevant to ownership
of ROHN common stock.
PiRod Holdings, Inc....... PiRod Holdings, Inc., a Delaware corporation,
is principally engaged, through its subsidiary,
in making and selling solid rod
telecommunications towers and related
equipment. The address of its principal
executive offices is 1545 Pidco Drive, P.O. Box
128, Plymouth, Indiana 46563, phone: (219) 936-
4221. See "Business of PiRod."
Merger Agreement.......... On December 22, 1998, ROHN and PiRod entered
into an Agreement and Plan of Merger (the
"Merger Agreement"), a copy of which is
attached hereto as Appendix A, providing for
the merger of PiRod into ROHN.
Annual Meeting of Stockholders of ROHN
Date, Time and Place of
the Meeting..............
An annual meeting of stockholders of ROHN is to
be held on Monday, March 22, 1999, at 10:00
a.m. Chicago Time, at ,
Chicago, Illinois (the "Meeting").
Purpose of the Meeting.... .To consider and vote upon a proposal to
approve and adopt the Merger Agreement
.To elect ten directors of ROHN
.To vote on approval of the ROHN 1999 Stock
Option Plan
.To transact any other business that may
properly come before the Meeting
Record Date............... Only holders of record of shares of ROHN common
stock at the close of business on February 1,
1999 are entitled to vote at the Meeting. On
that date, [52,846,099] shares of ROHN common
stock were outstanding.
1
<PAGE>
Vote Required............. The affirmative vote of the holders of the
majority of the outstanding shares of ROHN
common stock entitled to vote at the Meeting is
required to approve the Merger Agreement. The
UNR Asbestos-Disease Claims Trust (the "Trust")
has granted its proxy to PiRod to vote its
approximately 55.5% of shares of ROHN common
stock in favor of the Merger Agreement, subject
to certain conditions, including bankruptcy
court approval of the Trust's sale of its ROHN
shares in the Merger. Holders of a majority of
the PiRod shares have granted ROHN their
proxies to vote in favor of the Merger.
Accordingly, it is expected that more than the
majority vote of ROHN and PiRod stockholders
required to approve the Merger will be
obtained. See "The Merger--Voting Agreements."
Nominees for director receiving the affirmative
vote of the holders of a plurality of the ROHN
shares present in person or represented by
proxy and entitled to vote at the meeting will
be elected as directors. The affirmative vote
of a majority of the shares so voting is
required to approve the Option Plan.
The Merger
General................... In the Merger, PiRod will be merged into ROHN,
and each share of ROHN common stock outstanding
immediately prior to the Merger will be
converted into the right to receive $3.78 in
cash at the election of ROHN stockholders, or
will be retained by the ROHN stockholders. The
maximum number of ROHN shares to be cashed out
will be determined by dividing the cash
available from borrowings and cash on hand by
$3.78, but in no event more than 27,777,777
shares (approximately 52.6% of the outstanding
ROHN shares). The Trust has announced its
intention to elect cash for all of its
29,348,051 ROHN shares (approximately 55.5% of
those outstanding). If it does so and the
Merger occurs, there will be proration of the
available cash among all stockholders electing
cash, with any non-cashed ROHN shares retained.
Outstanding PiRod shares will be converted into
a total of approximately 7.65 million ROHN
shares of common stock. See "The Merger--
Capitalization of ROHN and PiRod and Exchange
of Shares."
Cash Election............. Accompanying this Proxy Statement/Prospectus is
an Election Form. Each ROHN stockholder
electing to receive cash for all or any part of
his ROHN shares must properly complete the
Election Form and return it, together with his
certificates for ROHN shares, to First Chicago
Trust Company of New York, the Exchange Agent.
Any ROHN stockholder not returning a properly
executed Election Form and certificates for the
appropriate number of ROHN shares by Friday,
March 19, 1999, will be deemed to have not
elected cash, and his shares will be treated as
retained. See "The Merger--Election Procedure."
Recommendation of ROHN's
Board of Directors.......
By unanimous vote at a meeting held on December
22, 1998, ROHN's Board of Directors determined
the Merger to be in the best
2
<PAGE>
interests of ROHN and its stockholders and
approved the Merger and the Merger Agreement.
The Board of Directors of ROHN unanimously
recommends that ROHN's stockholders approve the
Merger Agreement.
The ROHN Board's recommendation is based on
factors discussed in this Proxy
Statement/Prospectus, including the terms of
the Merger and the Merger Agreement, the
potential synergies and efficiencies flowing
from the combination of the companies and the
views of ROHN's management and financial
adviser. See "The Merger--Recommendation of
ROHN's Board of Directors; ROHN's Reasons for
the Merger."
Recommendation of PiRod's
Board of Directors.......
By written consent dated December 18, 1998, the
PiRod Board of Directors unanimously determined
that the terms of the Merger Agreement were
fair to, and in the best interests of, PiRod
and its stockholders and approved and adopted
the Merger Agreement. In addition, the PiRod
Board of Directors unanimously determined to
recommend to the stockholders of PiRod that
such stockholders vote to approve and adopt the
Merger Agreement. In reaching its determination
to approve the Merger, the PiRod Board of
Directors concluded that holding ROHN shares
represented a more favorable investment
opportunity than holding PiRod shares, after
taking into account the risks inherent in each
investment. The relevant factors and
information considered by PiRod's Board of
Directors are set forth under "The Merger--
Recommendation of PiRod's Board of Directors;
PiRod's Reasons for the Merger."
Interests of Certain
Persons in the Merger....
For information on the interests of certain
persons in the Merger, see "The Merger--
Management of ROHN after the Merger; ROHN
Stockholders Agreement" and "--Interests of
Certain Persons in the Merger."
Financing................. The Merger Agreement contemplates that ROHN
will incur approximately $166.5 million of new
senior indebtedness to finance the Merger (the
"Financing"). The proceeds of the Financing and
approximately $12.8 million of cash on hand of
ROHN and PiRod would be used to:
.provide up to $105 million to ROHN
stockholders electing cash
.refinance approximately $11.5 million of
ROHN's existing debt
.refinance approximately $47.9 million of
PiRod's existing debt
.pay fees and expenses estimated at $14.9
million (including approximately $1.9 million
in prepayment penalties)
See "The Merger--Financing."
3
<PAGE>
Opinion of ROHN's
Financial Adviser........
Donaldson, Lufkin & Jenrette Securities
Corporation has rendered an opinion to the
Board of Directors of ROHN and to the Trust to
the effect that the consideration package that
ROHN's stockholders may elect to receive and/or
retain in the Merger is fair to such
stockholders from a financial point of view.
See "The Merger--Opinion of ROHN's Financial
Adviser" and Appendix C to this Proxy
Statement/Prospectus.
Appraisal Rights.......... Under Delaware law, the holders of ROHN common
stock will not have appraisal rights in
connection with the Merger. PiRod stockholders
will waive their appraisal rights. See "The
Merger--Appraisal Rights."
Accounting Treatment...... The Merger will be accounted for by ROHN under
the purchase method of accounting. See "The
Merger--Accounting Treatment."
Certain Federal Income
Tax Consequences.........
In general, the Merger will be treated as a
redemption by ROHN from those ROHN stockholders
who receive cash in the Merger. If the
redemption qualifies as a sale or exchange with
respect to a particular stockholder, the
stockholder's gain or loss will be capital gain
or loss. No gain or loss will be recognized to
PiRod stockholders upon their receipt of ROHN
shares in the Merger in exchange for their
PiRod shares. See "The Merger--Certain Federal
Income Tax Consequences."
Management of ROHN after
the Merger; ROHN
Stockholders Agreement...
Following the Merger, ROHN will be the
surviving corporation, and its charter will
continue until subsequently changed. ROHN's by-
laws have been amended, such amendments to be
effective as of the effective time of the
Merger, to conform to provisions of the ROHN
Stockholders Agreement among ROHN, the Trust
and the stockholders of PiRod. That agreement
provides, among other things, that
.upon consummation of the Merger, ROHN's board
of directors will consist of 10 persons, four
designated by the Trust, two by the principal
PiRod stockholders, two management
representatives (Brian Pemberton, ROHN's chief
executive officer, and Myron Noble, the chief
executive officer of PiRod's subsidiary) and
two directors not affiliated with the Trust or
the PiRod stockholders (selected jointly by
the Trust and the principal PiRod
stockholders). Thereafter, the number of
directors which each of the Trust and the
principal PiRod stockholders will be entitled
to designate will decline if their ROHN share
ownership declines by specified amounts
4
<PAGE>
.the Trust and the PiRod stockholders will not
transfer ROHN shares, with certain limited
exceptions, prior to the first anniversary of
the Merger, without the consent of the Trust
and the principal PiRod stockholders
.as long as either the Trust or the principal
PiRod stockholders own beneficially at least
10% of ROHN's shares, ROHN will not take
certain actions without such party's consent,
including the adoption of a shareholder rights
plan or certain by-law amendments and the
entry into certain change of control
provisions
.the Trust and the PiRod stockholders will have
certain demand and/or piggyback rights to
registration of their ROHN shares under the
Securities Act of 1933.
See "The Merger--Management of ROHN after the
Merger; ROHN Stockholders Agreement."
Conditions to the Merger;
Termination..............
In addition to approval of the Merger Agreement
by ROHN's and PiRod's stockholders, the Merger
is subject to a number of conditions (including
consummation of the Financing) which, if not
fulfilled or waived, permit termination of the
Merger Agreement. The Merger Agreement may also
be terminated at any time prior to consummation
of the Merger by mutual consent of the parties
and by any party if it is not consummated on or
before May 15, 1999. See "The Merger--
Conditions for Merger and Other Provisions."
Expenses; Termination If the Merger is consummated, ROHN, as the
Fee....................... surviving corporation, will pay all costs and
expenses incurred in connection with the
Merger. If the Merger is not consummated, the
parties will bear their own expenses in
connection with the Merger, provided that ROHN
is to share the costs (up to $100,000) of
obtaining a commitment for the Financing. If
the Merger Agreement is terminated because
either ROHN or PiRod receives a proposal from a
third party relating to the acquisition of ROHN
or PiRod, as the case may be, which the board
of directors of ROHN or PiRod, as the case may
be, determines to be a superior proposal to the
Merger, the party abandoning the Merger will
make a cash payment to the other ($5.5 million
if ROHN is, and $2 million if PiRod is, the
abandoning party). See "The Merger--Expenses;
Termination Fee."
Effective Time of the If the Merger Agreement is approved and adopted
Merger.................... at the Meeting, and all other conditions to the
Merger have been met or waived, the parties
expect the Merger to be effective on the day of
the Meeting or shortly thereafter, upon the
filing of a certificate of merger with the
Delaware Secretary of State. The time of such
filing is referred to as the "Effective Time."
5
<PAGE>
Voting Agreements and
Grant of Proxies by
Principal Stockholders
of Each Party............
To induce each of ROHN and PiRod to enter into
the Merger Agreement, the principal
stockholders of each have, subject to certain
conditions, agreed to vote in favor of the
Merger and have granted to the other proxies
covering sufficient shares of common stock of
each to approve the Merger. See "The Merger--
Voting Agreements" and "Introduction--Record
Date, Voting Rights; Vote Required."
Treatment of Options and
Warrants.................
The outstanding employee stock options of
PiRod, and the outstanding warrants to purchase
PiRod shares, will become options or warrants
to purchase ROHN shares after the Merger, based
on specified exchange ratios for PiRod class A
and class L common stock. The outstanding ROHN
employee stock options will not be affected by
the Merger. See "The Merger--Treatment of
Options and Warrants."
Forward-Looking
Statements May Prove
Inaccurate............... ROHN and PiRod have made forward-looking
statements in this document that are subject to
risks and uncertainties. Forward-looking
statements include the information concerning
possible or assumed future results of
operations of ROHN, PiRod or the combined
corporation. Statements containing words such
as "believes," "expects," "anticipates" or
similar expressions are forward-looking
statements.
Many factors, some of which are discussed
elsewhere in this document, could affect the
future financial results of ROHN, PiRod or the
combined company and could cause those results
to differ materially from those expressed in
the forward-looking statements contained in
this document. These factors include
.operating, legal and regulatory risks
.economic, political and competitive forces
affecting the telecommunications and equipment
business
.the risk that ROHN's and PiRod's analyses of
these risks and forces could be incorrect or
that the strategies developed to address them
could be unsuccessful.
See also "Risk Factors."
Antitrust................. The Merger may not be consummated until
specified waiting period requirements have been
satisfied under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR
Act"), and the rules promulgated thereunder by
the Federal Trade Commission (the "FTC"). On
December 24, 1998, ROHN and PiRod filed the
Notification and Report Forms required pursuant
to the HSR Act. The waiting period terminated
on January 23, 1999. The Merger could still be
challenged on antitrust grounds. See "The
Merger--Antitrust."
6
<PAGE>
Selected Unaudited Pro Forma Combined Financial Data
(dollars in thousands, except per share data)
The following selected unaudited pro forma combined financial data have been
derived using the historical consolidated financial statements of ROHN and
PiRod included elsewhere or incorporated by reference herein. This unaudited
pro forma combined financial data gives effect to the Merger pursuant to the
Merger Agreement under the purchase method of accounting and assumes the Merger
occurred on the first day of the earliest period presented. Upon consummation
of the Merger, PiRod's December fiscal year end will be conformed to ROHN's
December year end for 1999. These unaudited pro forma combined financial data
are provided for comparative purposes only and do not purport to be indicative
of the results which actually would have been obtained if the Merger had been
effected for the periods indicated or results which may be obtained in the
future.
This unaudited pro forma combined financial data (in thousands of dollars
except the per share amounts) should be read in conjunction with the historical
consolidated financial statements of ROHN and PiRod, and notes thereto,
included elsewhere or incorporated by reference herein, and the Unaudited Pro
Forma Condensed Combined Financial Statements, and notes thereto, included
elsewhere herein.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
------------------ ------------
1998 1997 1997
-------- -------- ------------
<S> <C> <C> <C>
Statement of Operations Data:
Net sales....................................... $169,386 $151,810 $208,838
Income before extraordinary item................ 6,420 7,046 14,181
Income per share:
Basic ........................................ $ 0.20 $ 0.22 $ 0.44
Diluted....................................... $ 0.20 $ 0.22 $ 0.43
Balance Sheet Data:
Total assets.................................... $189,072 $188,582
Total debt...................................... 166,500 166,500
Book value per share............................ $ (0.33) $ (0.70)
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial
Statements
7
<PAGE>
ROHN Selected Historical Consolidated Financial Data
(dollars in thousands, except per share data)
The selected historical consolidated financial data set forth below as of
and for each of the five years ended December 31, 1997 have been derived from
the audited consolidated financial statements of ROHN incorporated by reference
herein. The selected historical consolidated financial data for ROHN as of and
for the nine months ended September 30, 1998 and 1997 have been derived from
the unaudited consolidated financial statements of ROHN incorporated by
reference herein. In the opinion of ROHN's management, the unaudited historical
consolidated financial statements include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of ROHN's
financial position and results of operations for such periods; however, they
are not necessarily indicative of results for the full year. The selected
historical consolidated financial data set forth below should be read in
conjunction with, and are qualified by reference to, ROHN's "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the audited and unaudited consolidated financial statements, and the
accompanying notes thereto, incorporated by reference herein.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,(1)
----------------- ---------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net sales............... $128,537 $114,042 $158,132 $154,434 $142,216 $107,026 $ 73,811
Income from continuing
operations(2)(3)....... 11,351 10,516 18,919 20,282 19,001 11,854 6,161
Net income.............. 11,351 10,516 18,919 46,041 29,276 31,325 18,784
Earnings per share
(basic):
Continuing operations.. $ 0.22 $ 0.20 $ 0.36 $ 0.39 $ 0.37 $ 0.24 $ 0.13
Discontinued
operations--
Income from operations. -- -- -- 0.08 0.20 0.45 0.27
Gain (loss) on sales... -- -- -- 0.42 -- (0.05) --
Net income per share... $ 0.22 $ 0.20 $ 0.36 $ 0.89 $ 0.57 $ 0.64 $ 0.40
Earnings per share
(diluted):
Continuing operations.. $ 0.22 $ 0.20 $ 0.36 $ 0.39 $ 0.37 $ 0.24 $ 0.13
Discontinued
operations--
Income from operations. -- -- -- 0.08 0.20 0.44 0.26
Gain (loss) on sales... -- -- -- 0.42 -- (0.05) --
Net income per share... $ 0.22 $ 0.20 $ 0.36 $ 0.89 $ 0.57 $ 0.63 $ 0.39
Balance Sheet Data:
Total assets............ $107,061 $101,561 $108,658 $ 93,372 $161,226 $258,106 $229,505
Total debt.............. 11,507 13,412 12,219 15,022 10,861 5,056 31,301
Book value per share.... 1.32 1.03 1.10 0.80 2.43 4.27 3.96
Cash dividends per share
of common stock........ -- -- $ 0.10 $ 2.60 $ 2.55 $ 0.20 $ 1.20
</TABLE>
- --------
(1) Prior year results have been restated to reflect the 1994 discontinuance of
Unarco Material Handling and the 1995 discontinuance of UNR Leavitt, Unarco
Commercial Products, UNR Home Products and Real Time Solutions, Inc.
(2) Income from continuing operations for the year ended December 31, 1997
includes other income of $2.6 million, net of tax, related to the sale of
an investment in a non-related business in the fourth quarter.
(3) During the third quarter of 1997, ROHN recorded a restructuring charge of
$3.4 million ($2.1 million after-tax) related to cost cutting measures
including early retirement costs, work force reductions and expense
associated with the development and implementation of this program.
8
<PAGE>
PiRod Selected Historical Financial Data
(dollars in thousands, except per share data)
Set forth below is selected historical financial data of PiRod and PiRod
Inc., an Indiana corporation (the "Predecessor"), for the dates and for the
periods indicated. The selected financial data for PiRod as of and for the year
ended December 28, 1997 and as of and for the four month period ended December
29, 1996 has been derived from the audited financial statements of PiRod that
appear elsewhere in this Proxy Statement/Prospectus. The selected financial
data for the Predecessor as of and for the eight month period ended August 27,
1996 and as of and for the year ended December 31, 1995 has been derived from
the unaudited financial statements of the Predecessor that appear elsewhere in
this Proxy Statement/Prospectus. The selected financial data for the
Predecessor as of and for the years ended December 31, 1994 and 1993 has been
derived from the unaudited financial statements of the Predecessor that are not
included in this Proxy Statement/Prospectus. The selected financial data for
PiRod as of and for the nine month periods ended September 27, 1998 and
September 28, 1997 has been derived from the unaudited financial statements of
PiRod that appear elsewhere in this Proxy Statement/Prospectus. Results for the
interim nine month periods include all adjustments, consisting only of normal
recurring adjustments, which management considers necessary for the fair
presentation of results of operations for such periods, however they are not
necessarily indicative of results for the full year. The selected historical
financial data set forth below should be read in conjunction with, and is
qualified by reference to "PiRod Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the audited and unaudited
financial statements, and the accompanying notes thereto, of PiRod and the
Predecessor included elsewhere in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
PiRod (2) Predecessor
----------------------------------------------------- -----------------------------------------------
Eight
Nine Months Ended Four Months Year Ended December 31,
--------------------------- Year Ended Months Ended Ended -----------------------------------
September 27, September 28, December 28, December 29, August 27,
1998 1997 1997 1996 (7) 1996 (1) 1995 1994 1993
------------- ------------- ------------ ------------ ----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of
Operations Data:
Net sales........ $40,849 $37,768 $50,706 $19,339 $30,274 $33,437 $27,349 $19,855
Income (loss)
from continuing
operations (3).. (272) 961 1,400 (59) 4,060 5,485 4,308 2,442
Net income
(loss) (3)...... (272) 879 1,318 (59) 4,060 5,485 4,308 2,442
Unaudited loss
per Class A
share (diluted):
(5)
Income (loss)
from continuing
operations...... $ (2.13) $ (0.35) $ (0.35) $ (0.76)
Net income
(loss).......... $ (2.13) $ (0.45) $ (0.46) $ (0.76)
Balance Sheet
Data:
Total assets..... $51,815 $52,359 $52,241 $55,475 $22,070 $14,039 $11,806 $ 8,089
Long term debt,
including
current portion. 47,874 49,680 49,666 52,547 5,072 3,700 2,526 1,109
Book value per
Class A share
(6)............. $ (0.00) $ (0.00) $ (0.00) $ (0.01) -- -- -- --
Cash dividends on
common
stock (4)....... -- -- -- -- 4,892 4,827 2,646 3,018
</TABLE>
- --------
(1) On January 1, 1996, the Predecessor acquired all of the outstanding stock
of Plymouth White Metal, Inc. ("Plymouth") in a purchase transaction. The
operating results of Plymouth are included in the Predecessor's results of
operations from January 1, 1996. See Note 3 to the Predecessor's unaudited
financial statements.
9
<PAGE>
(2) On August 28, 1996, PiRod acquired substantially all of the operating
assets and liabilities of the Predecessor in a purchase transaction. Due to
the change in accounting basis arising from the acquisition, the financial
statements of PiRod subsequent to the acquisition are not necessarily
comparable to those of the Predecessor prior to the acquisition. See Note 1
to PiRod's audited financial statements.
(3) Through August 27, 1996, the Predecessor was an S-Corporation for federal
income tax purposes and, therefore, federal taxes on the net income of the
Predecessor were paid directly by the individual shareholders. As a result,
there were no federal income taxes incurred by the Predecessor for the
periods presented. Certain states, however, did not recognize the
Predecessor's S-Corporation status and, in such instances, the Predecessor
did provide for income taxes in those states.
(4) Through August 27, 1996, the Predecessor paid annual cash dividends to its
shareholders to allow each shareholder to pay the federal income taxes of
the Predecessor (see Note 3 above). No dividends have been paid by PiRod
subsequent to the acquisition of the Predecessor. Given the changes in the
capital structure effected in connection with the acquisition of the
Predecessor, dividend per share amounts for the Predecessor are not
presented as they are not considered to be meaningful.
(5) Basic and diluted earnings per share amounts are the same. Given the
changes in the capital structure effected in connection with the
acquisition of the Predecessor, earnings per share amounts for the
Predecessor are not presented as they are not considered to be meaningful.
(6) Given the changes in the capital structure effected in connection with the
acquisition of the Predecessor, book value per share amounts for the
Predecessor are not presented as they are not considered to be meaningful.
(7) Statement of operations data represents operating data of PiRod for the
period from July 24, 1996 (inception) to December 29, 1996. PiRod had no
substantive operations for the period July 24, 1996 through August 28,
1996, the date of the acquisition of the Predecessor.
10
<PAGE>
COMPARATIVE PER SHARE INFORMATION
The following table sets forth certain per common share information for ROHN
and PiRod on both historical and pro forma combined bases (giving effect to the
Merger using the purchase method of accounting) and certain information on an
equivalent pro forma combined basis for each share of PiRod class A common
stock. See "Unaudited Pro Forma Condensed Combined Financial Statements." No
cash dividends have ever been declared or paid on PiRod class A common stock.
The information set forth below should be read in conjunction with the
historical consolidated financial statements of ROHN and PiRod and the
unaudited pro forma condensed combined financial information, including the
notes thereto, incorporated by reference or appearing elsewhere in this Proxy
Statement/Prospectus.
<TABLE>
<CAPTION>
Per Share of Common Stock
-------------------------
Income Cash Book
(Loss)(1) Dividends Value
--------- --------- -----
<S> <C> <C> <C>
ROHN--Historical (2):
Year ended December 31, 1997.......... $ 0.36 $0.10 $1.10
Nine months ended September 30, 1998.. 0.22 -- 1.32
ROHN--Pro Forma Combined (2)(3):
Year ended December 31, 1997.......... 0.43 -- (0.70)
Nine months ended September 30, 1998.. 0.20 -- (0.33)
PiRod--Historical (4):
Year ended December 28, 1997.......... (0.35) -- 0.00
Nine months ended September 27, 1998.. (2.13) -- 0.00
PiRod--Equivalent Pro Forma Combined
(5):
Year Ended December 28, 1997.......... 1.60 0.37 (1.98)
Nine months ended September 27, 1998.. 0.75 -- (1.23)
</TABLE>
- --------
(1) Income (loss) represents income before extraordinary item presented on a
diluted basis.
(2) Historical book value per share information for ROHN as of the end of each
period presented is computed by dividing historical stockholders' equity by
the number of ROHN shares outstanding at the end of each period presented,
excluding common stock equivalents. Pro forma combined book value per share
information as of the end of each period presented is computed by dividing
pro forma stockholders' equity by the number of ROHN shares outstanding on
such dates and the ROHN shares to be issued in the Merger.
(3) The ROHN Pro Forma Combined Income (Loss) per share amounts for the year
ended December 31, 1997 and for the nine months ended September 30, 1998
give effect to the Merger as if it had occurred on January 1, 1997.
(4) Historical book value per share information for PiRod as of the end of each
period presented is computed by dividing historical stockholders' equity by
the number of shares of PiRod class A common stock outstanding at the end
of each period presented, excluding common stock equivalents.
(5) Equivalent pro forma combined per share information for PiRod is determined
by multiplying the ROHN pro forma combined amounts by 3.7282, the PiRod
class A common stock exchange ratio, to represent equivalent per share
amounts to stockholders of PiRod.
11
<PAGE>
ROHN Per Share Market Information
ROHN shares are publicly traded in the over-the-counter market under the
symbol ROHN on the Nasdaq National Market. The high and low sales prices of
ROHN shares on the Nasdaq National Market, as reported by the Dow Jones News
Service, were:
<TABLE>
<CAPTION>
Dividends
High Low Per Share
------ -------- ---------
<S> <C> <C> <C>
1997
First Quarter....................................... $8 $5 7/8 $--
Second Quarter...................................... 7 7/8 5 1/4 --
Third Quarter....................................... 6 7/8 4 1/4 --
Fourth Quarter...................................... 6 4 7/16 .10
1998
First Quarter....................................... 6 1/4 4 11/16 --
Second Quarter...................................... 6 1/4 3 3/4 --
Third Quarter....................................... 4 3/4 1 3/4 --
Fourth Quarter...................................... 3 7/16 1 13/16 --
1999
First Quarter (through February ).................
</TABLE>
The closing price per share of ROHN common stock on the Nasdaq National
Market on December 22, 1998, the last business day preceding the public
announcement of the Merger, was $2-27/32, and $ on February , 1999.
Shares of PiRod capital stock are not publicly traded.
12
<PAGE>
RISK FACTORS
Stockholders of ROHN who may wish to retain their ROHN shares, and
stockholders of PiRod who receive ROHN shares in the Merger, should consider
carefully the risk factors described below, as well as the other information
included in this Proxy Statement/Prospectus.
Possible Reduced Liquidity of ROHN Shares
ROHN's shares are currently quoted on the Nasdaq National Market. If
27,777,777 of ROHN's currently outstanding shares, representing approximately
52.6% of ROHN's outstanding shares, are redeemed pursuant to cash elections,
and approximately 7.65 million shares are issued to former PiRod stockholders,
ROHN will have approximately 38% fewer shares outstanding after the Merger.
Such shares may trade in lesser quantities than now, and the market price for
the ROHN shares may be adversely affected by lower liquidity. See "The
Merger--Capitalization of ROHN and PiRod and Exchange of Shares" commencing on
page 30.
Leverage and Debt Service Requirements
Upon consummation of the Merger, ROHN will have substantial indebtedness
and significant debt service obligations. As of September 30, 1998, on a pro
forma basis after giving effect to the Merger and the Financing, ROHN would
have had total long-term indebtedness, including current maturities, of $166.5
million and a deficit in stockholders' equity of $10.9 million. The terms of
the Financing will permit ROHN and its subsidiaries to incur additional
indebtedness, including secured indebtedness, subject to certain limitations.
See "The Merger--Financing" commencing on page 28.
ROHN's high degree of leverage could have important consequences to ROHN's
stockholders, including
. a substantial portion of ROHN's cash provided from operations will be
committed to the payment of debt service and will not be available to
ROHN for other purposes
. ROHN's ability to obtain additional financing in the future for working
capital, capital expenditures or acquisitions may be limited, and
. ROHN levels of indebtedness may limit its flexibility in reacting to
changes in its business environment.
ROHN's ability to pay principal and interest on the Financing and to
satisfy its other debt obligations will depend upon the future operating
performance of ROHN, PiRod and their subsidiaries, which will be affected by
prevailing economic conditions in the markets served and financial, business
and other factors, certain of which are beyond their control, as well as the
availability of borrowings under the Financing or successor facilities. ROHN
may be required to refinance all or a portion of its indebtedness incurred
under the Financing at or prior to maturity, or sell assets or seek to raise
additional equity capital. No assurance can be given that any such debt or
equity financing will be available to ROHN on acceptable terms, if at all.
Significance of Telecommunications Industry Success to ROHN
The success of the PCS and cellular build-outs, as well as other elements
of the telecommunications industry, are essential to the future growth of
ROHN. See "Business of ROHN--General" and "--Telecommunications Equipment
Market" commencing on page 40.
Principal Stockholders
The Trust has advised ROHN that it intends to elect conversion of all of
its 29,348,051 ROHN shares into cash. After consummation of the Merger, the
Trust will own between approximately 5% and 43% of ROHN's
13
<PAGE>
outstanding common stock (depending on the number of other ROHN stockholders
electing cash and assuming that there is cash available to convert the maximum
of 27,777,777 ROHN shares into cash) and former PiRod stockholders will own
approximately 23%. In addition, the former PiRod stockholders will have the
right to acquire additional ROHN shares pursuant to currently exercisable
warrants. While the Trust's percentage will be less than the majority of ROHN's
outstanding stock it currently owns, depending upon the level of the Trust's
ownership of ROHN shares following the Merger, the Trust will continue to have
substantial representation on the Board of Directors of ROHN and will have
substantial influence over its corporate and management policies, including
decisions relating to any mergers or acquisitions of ROHN, sales of all or
substantially all of its assets or other significant corporate transactions.
ROHN, the Trust and the PiRod stockholders have entered into the ROHN
Stockholders Agreement, which provides, among other things, that: (i) ROHN will
nominate, and the Trust and the PiRod stockholders will vote for the election
of, directors in accordance with the agreement (initially, the Trust will
designate four directors and the principal PiRod stockholders will designate
two directors), (ii) the Trust and the PiRod stockholders will have certain
rights upon sales of ROHN shares, (iii) the Trust and the PiRod stockholders
will not transfer ROHN shares, with certain limited exceptions, prior to the
first anniversary of the Merger, without the consent of the Trust and the
principal PiRod stockholders, and (iv) as long as either the Trust or the
principal PiRod stockholders own beneficially at least 10% of ROHN's shares,
ROHN will not take certain actions without such party's consent, including the
adoption of a shareholder rights plan or certain by-law amendments and the
entry into certain change in control provisions. See "The Merger--Management of
ROHN after the Merger; ROHN Stockholders Agreement" on page 31.
Competition
Most of ROHN's and PiRod's products are sold in highly competitive markets.
ROHN and PiRod compete throughout the world with a significant number of
companies of varying sizes in a wide variety of markets, on the basis of
quality, price, reliability, availability and service. Competitive pressures or
other factors could cause ROHN to lose market share or could result in
significant price erosion, either of which could have a material adverse effect
upon ROHN's results of operations, both before and after the Merger. See
"Business of ROHN--Competition" on page 42.
Fraudulent Transfer Considerations
A significant portion of the proceeds of the Financing will be distributed
to ROHN stockholders in the Merger. Under fraudulent transfer law, if a court
were to find in a lawsuit by an unpaid creditor or representative of creditors
of ROHN that ROHN received less than fair consideration or reasonable
equivalent value for incurring the indebtedness incurred in the Financing, and,
at the time of such incurrence, ROHN
. was insolvent or was rendered insolvent by reason of such incurrence
. was engaged or about to engage in a business or transaction for which its
remaining property constituted unreasonably small capital, or
. intended to incur, or believed it would incur, debts beyond its ability
to pay as such debts mature, then
a court could, among other things, void all or a portion of the ROHN's
obligations under the Financing and/or subordinate ROHN's other obligations to
the Financing, one effect of which would be to create a default under the
Financing, and another of which might be to permit ROHN's creditors (other than
those who are parties to the Financing) to seek return of cash distributed to
ROHN stockholders in the Merger. The measure for insolvency for purposes of
determining whether a transfer is avoidable as a fraudulent transfer varies,
depending upon the law of the jurisdiction which is being applied. Generally,
however, a debtor would be considered insolvent if the sum of all of its
liabilities were greater than the value of all of its property at a fair
valuation, or if the present fair saleable value of the debtor's assets were
less than the amount required to repay its probable liability on its debts as
they become absolute and mature. There can be no assurance as to what standard
a court would apply in order to determine solvency.
14
<PAGE>
Management of ROHN believes that the Financing is being incurred without the
intent to hinder, defraud or delay creditors, for proper purposes and in good
faith. Management believes that ROHN will receive equivalent value at the time
the indebtedness under the Financing is incurred. As of September 30, 1998,
after giving pro forma effect to the Merger and the application of the proceeds
of the Financing, ROHN would have a deficit in stockholders' equity of
approximately $10.9 million. See pp. 52 to 59. Management believes that,
although a significant portion of the net proceeds from the Financing will be
distributed to ROHN's stockholders, for purposes of the Federal Bankruptcy Code
and state fraudulent transfer or conveyance laws, ROHN is, and after incurrence
of the Financing and the application of the proceeds thereof, will be, solvent,
that it will have sufficient capital for carrying on its business and will be
able to pay its debts as they mature. These beliefs are based upon ROHN's and
PiRod's operating history, management's analysis of cash flows, the estimated
fair value of ROHN's and PiRod's assets and their estimated liabilities after
giving effect to the Merger and the application of the proceeds from the
Financing, and the utilization of an outside, expert adviser on solvency
matters. As a result of the uncertainty of the application of fraudulent
transfer or conveyance law in transactions similar to the Merger, there can be
no assurance that a court passing on any of the foregoing issues would agree
with management's views.
Risks Associated with Merger
Although the ROHN Board of Directors has determined that the Merger is fair
to, and in the best interests of, ROHN stockholders, all business combinations,
including the Merger, also include risks and disadvantages. With respect to the
Merger, potential risks and disadvantages to ROHN stockholders identified by
the ROHN Board of Directors and management include the difficulties inherent in
combining and integrating the two corporations, including management and
employee staffs and manufacturing, distribution and customer service operations
and the potential distraction of management caused by completing the
transaction and integrating the companies.
15
<PAGE>
INTRODUCTION
General
This Proxy Statement/Prospectus is being furnished to stockholders of ROHN
in connection with the solicitation by the Board of Directors of ROHN of
proxies for use at an annual meeting of ROHN stockholders to be held on Monday,
March 22, 1999, at 10:00 a.m., Chicago time, at , Chicago,
Illinois, and at any adjournments or postponements (the "Meeting"). It is also
being furnished to stockholders of PiRod as a prospectus for the ROHN shares to
be issued to PiRod stockholders in the Merger.
At the Meeting, ROHN stockholders will consider and vote upon a proposal to
approve and adopt the Agreement and Plan of Merger, dated as of December 22,
1998 (the "Merger Agreement"), between ROHN and PiRod, providing for the merger
(the "Merger") of PiRod into ROHN and the conversion of shares of PiRod common
stock into shares of ROHN common stock, and the conversion of shares of ROHN
common stock, at the election of the holder, into the right to receive $3.78 in
cash per share, subject to proration. The maximum number of ROHN shares to be
cashed out will be determined by dividing the cash available from borrowings
and cash on hand by $3.78, but in no event will more than 27,777,777 shares
(approximately 52.6% of the outstanding ROHN shares) be so cashed out. The
Trust has announced its intention to elect cash for all of its 29,348,051 ROHN
shares (approximately 55.5% of those outstanding). If it does so and the Merger
occurs, there will be proration of the available cash among all stockholders
electing cash, with any non-cashed ROHN shares retained. Upon consummation of
the Merger, each share of PiRod class A common stock outstanding immediately
prior to the Merger will be converted into 3.7282 ROHN shares, and each share
of PiRod class L common stock will be converted into 61.6859 ROHN shares. See
"The Merger--Capitalization of ROHN and PiRod and Exchange of Shares." The
Boards of Directors of each of ROHN and PiRod have unanimously approved the
Merger and the Merger Agreement.
At the meeting, ROHN stockholders will also vote on the election of
directors and the approval of ROHN's 1999 Stock Option Plan (the "Option
Plan").
ROHN did not hold an annual meeting of stockholders in 1998.
Record Date; Voting Rights; Vote Required
The close of business on February 1, 1999 (the "Record Date") has been fixed
as the record date for determination of the ROHN stockholders who are entitled
to notice of, and to vote at, the Meeting. As of the Record Date, there were
[52,846,009] ROHN shares outstanding. The holders of record on the Record Date
of ROHN shares are entitled to one vote per share on each matter submitted to a
vote at the Meeting. The presence at the Meeting, in person or by proxy, of the
holders of a majority of the outstanding ROHN shares entitled to vote
constitutes a quorum for the transaction of business. Under the Delaware
General Corporation Law ("DGCL"), the affirmative vote of the holders of a
majority of the outstanding ROHN shares is required for approval and adoption
of the Merger Agreement. Election of directors is by plurality vote, and
approval of the Option Plan requires the affirmative vote of the majority of
the shares voted at the Meeting. Approval of the Merger Agreement by PiRod's
stockholders requires the affirmative vote of a majority of the outstanding
shares; such vote is expected to be obtained. The holders of more than a
majority of the outstanding shares of each of ROHN and PiRod (subject to
certain conditions) have granted the other company the right to vote their
shares for the Merger, which is more than the required vote for approval. See
"The Merger--Voting Agreements."
Proxy Solicitation
All properly completed proxies received at or prior to the Meeting which
have not been revoked will be voted at the Meeting in accordance with the
instructions contained therein. Proxies solicited by the Board of
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Directors of ROHN which contain no instructions regarding the proposals
specified in the form of a proxy will be voted
.FOR the approval and adoption of the Merger Agreement
.FOR the election of all directors, and
.FOR approval of the Option Plan.
If any other matters are brought before the Meeting and submitted to a vote,
all proxies solicited by the Board of Directors of ROHN will be voted in
accordance with the judgment of the persons voting the proxies. Execution and
delivery of a proxy will not prevent a stockholder from attending the Meeting
and voting in person. A stockholder who has executed and returned a proxy may
revoke it at any time before it is voted, but only by executing and returning a
proxy bearing a later date, by giving written notice of revocation to the
Secretary of ROHN bearing a later date than the proxy or by attending the
Meeting and voting in person. Attendance at the Meeting will not by itself
revoke a proxy.
If a quorum is not obtained, or fewer shares are voted in favor of approval
and adoption of the Merger Agreement than the number required for approval and
adoption, the Meeting may be adjourned for the purpose of obtaining additional
proxies for votes in favor of the proposal or for any other purpose, and, at
any subsequent reconvening of the Meeting, all proxies will be voted in the
same manner as such proxies would have been voted at the original meeting
(except for any proxies which have effectively been revoked or withdrawn), even
if they had been effectively voted on the same or any other matter at a
previous meeting.
A proxy submitted by a stockholder may indicate that all or a portion of the
ROHN shares represented by such proxy are not being voted by such stockholder
with respect to a particular matter. This could occur, for example, when a
broker is not permitted to vote shares held in street name on certain matters
in the absence of instructions from a beneficial owner. The shares subject to
any such proxy which are not being voted with respect to a particular matter
(the "non-voted shares") will be considered shares not present and not entitled
to vote on such matter, although such shares may be considered present and
entitled to vote for other purposes and will count for purposes of determining
the presence of a quorum. ROHN's bylaws provide that shares voted to abstain
will be counted as present for purposes of determining a quorum but will not be
included in calculating the number of votes on any question. Non-voted and
abstaining shares will have the effect of "No" votes on Proposal 1--The Merger
and will have no effect on Proposal 2--Nominees for Director and Proposal 3--
Approval of the 1999 Stock Option Plan.
The cost of solicitation of the stockholders of ROHN will be paid by ROHN.
Such cost includes the reimbursement of banks, brokerage firms, nominees,
fiduciaries and other custodians for expenses of forwarding solicitation
materials to beneficial owners of shares. In addition to the solicitation of
proxies by use of mail, the directors, officers and employees of ROHN may
solicit proxies personally or by telephone, telegraph or facsimile
transmission. Such directors, officers and employees will not be additionally
compensated for such solicitation but may be reimbursed for out-of-pocket
expenses incurred in connection therewith.
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PROPOSAL 1 --
THE MERGER
The description of the Merger Agreement set forth below is not complete. It
is attached as Appendix A to this Proxy Statement/Prospectus.
General
ROHN will be the surviving corporation in the Merger and will hold and own
all properties, assets and liabilities of ROHN and PiRod. As a result of the
Merger, the stockholders of PiRod, a Delaware corporation, will become
stockholders of ROHN, also a Delaware corporation.
Background of the Merger
In March of 1998, the UNR Asbestos-Disease Claims Trust (the "Trust"), the
owner of approximately 55.5% of the common stock of ROHN, determined to seek a
merger, sale of shares or other transaction that would involve disposition by
the Trust of all of its shares of ROHN for cash. On March 27, 1998, the Trust
engaged Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") as its
exclusive financial adviser with respect to the sale of all or a portion of the
Trust's shares or sale of the entire company. ROHN agreed to also engage DLJ,
to pay the fees of DLJ and to indemnify DLJ if the Board of Directors of ROHN
approved a merger or other transaction involving the ROHN shares not owned by
the Trust.
During April 1998 DLJ prepared a Confidential Information Memorandum
concerning ROHN, and in May, DLJ began contacting 86 potentially interested
parties with respect to a possible sale of ROHN. Fifty-one firms expressed an
interest in receiving further information. These firms were required to sign a
confidentiality agreement and received a copy of the Confidential Information
Memorandum. DLJ established July 2, 1998, as the date for submission of
preliminary non-binding indications of interest. Eight potential buyers
submitted preliminary indications which ranged in value from a low of $3.25 per
ROHN share to a high of $5.75 per ROHN share. On July 9, 1998, DLJ presented a
summary of the proposals to the Board of Directors of ROHN and to
representatives of the Trust. Based upon, among other things, DLJ's analysis of
the proposals submitted, five potential buyers were invited to receive
presentations by ROHN management and to conduct preliminary due diligence.
Management presentations were made to those parties during the period between
July 29, 1998 and August 13, 1998.
The interested parties were requested to submit final bids on August 31,
1998. Two potential buyers, Bain Capital, Inc. ("Bain") and one other firm
("Company A") submitted proposals. Bain submitted a proposal under which PiRod,
an affiliate of Bain, would merge with and into ROHN. Under the Bain proposal,
ROHN stockholders would receive $84 million in cash and $126 million in common
stock in exchange for their shares and PiRod stockholders would receive stock
in the surviving corporation. The valuation of PiRod was based on an enterprise
value of $83.5 million. The Bain proposal valued the equity securities of ROHN
at approximately $210 million, or $3.97 per share. Under the Bain proposal, the
new company would incur approximately $154 million of senior debt. Company A
expressed a continuing interest in submitting a final bid at a valuation
between $3.30 and $4.00 per share, but indicated that its final proposal would
not be submitted until later in September.
On September 3, 1998, a third firm ("Company B") submitted a proposal. The
Company B proposal contemplated a merger of ROHN with an operating company in a
business similar to ROHN. Under this proposal, ROHN stockholders would receive
a combination of stock and cash which Company B stated would be valued at $4.00
per share.
On September 3, 1998, the Board of Directors of ROHN met and received a
report from DLJ concerning the bid process. ROHN's Board reviewed the bids
received and discussed alternatives to the sale of ROHN, including a leveraged
recapitalization through either a high yield debt offering or senior bank debt.
At the
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conclusion of the meeting, the Board of ROHN directed DLJ to continue
discussions with the bidders and to obtain further details concerning the
respective proposals and also to further explore a leveraged recapitalization.
During the month of September 1998, DLJ held discussions with the three
bidding parties concerning their proposals. On September 25, 1998, Company A
submitted a proposal for a leveraged recapitalization of ROHN under which
Company A would acquire approximately 97% of the outstanding shares of ROHN at
a purchase price valued by Company A at $3.75 per share. The purchase price
would consist of $3.20 in cash and $0.55 in the form of a new issue of
preferred stock carrying a semi-annual dividend of 10% per annum in additional
shares of preferred stock. In the event the preferred stock was not redeemed
within 18 months, a special dividend of $5.0 million in the form of additional
shares of preferred stock would be paid ratably to the then holders of the
preferred stock.
On September 28, 1998, the ROHN Board of Directors and a trustee of the
Trust met and received a further presentation from DLJ concerning the Company
A, Company B and Bain proposals. DLJ also discussed a recapitalization of ROHN
with either high-yield debt or senior bank debt. DLJ presented an analysis of
each of these alternatives. DLJ also presented a valuation analysis of ROHN
using various valuation methodologies. DLJ representatives stated that they
believed the firm would be prepared to provide a fairness opinion concerning
sale of ROHN at a level of $3.75 per share in cash. The Board directed DLJ to
continue discussions with bidding parties and to seek an all-cash offer of
$3.75 per share. The Board also requested DLJ to conduct further analysis on
the leveraged recapitalization alternative. After the conclusion of the Board
meeting on September 28, 1998, a revised proposal was received from Company B
to acquire ROHN in a cash tender offer for all of the outstanding shares at a
price of $3.00 per share. That transaction was to be financed through an equity
investment by Company B of $50 million and by bank loans.
During the month of October 1998, DLJ continued discussions with Company A
concerning its proposal, which included negotiations concerning the terms of
its preferred stock component. During this period, Company A also continued
conducting due diligence on ROHN, and its attorneys began negotiations with
ROHN's attorneys concerning transaction documents.
On October 15, 1998, Company B submitted a second revised offer, proposing a
cash tender offer for all of the outstanding common stock of ROHN at a price of
$3.25 per share. This proposal was to be financed through an equity investment
of $60 to $70 million by Company B and bank debt.
On October 22, 1998, ROHN issued third quarter earnings, reporting an
increase in sales and net income. However, ROHN also reported that industry-
wide softness for telecommunications towers, due in part to the continued
slowness in the domestic buildout for PCS systems, had impacted the pricing for
towers. ROHN also lowered its internal forecast of financial results for the
fourth quarter of 1998 and for the full year ending December 31, 1998.
On October 27, 1998, Bain submitted a revised proposal for a
recapitalization of ROHN which valued the equity securities of ROHN at
approximately $200 million. Under this proposal, PiRod would merge into ROHN
and ROHN stockholders would receive cash and retain common stock of ROHN. PiRod
stockholders would receive common stock of ROHN in exchange for their PiRod
shares. The cash portion of the merger consideration to be received by the ROHN
stockholders would total $160 million. The allocation of common stock of ROHN
as the surviving corporation would be pursuant to a fixed ratio based on a pre-
transaction equity valuation of $200 million for ROHN and $30 million for
PiRod, with $50 million of equity to be issued to new investors. The ROHN
stockholders would be given the option to elect to receive more cash or common
stock than they would receive based on a pro rata allocation of cash and common
stock. The transaction was to be financed by ROHN's incurrence of $168 million
of new senior debt, the rolling over of approximately $12 million of PiRod
existing debt and the raising of $50 million in new common equity.
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On October 28, 1998, Company A advised DLJ that it was reducing its offer
based upon ROHN's revised forecast of financial results. Under the revised
proposal, Company A would acquire approximately 97% of the outstanding shares
of ROHN at a purchase price valued by Company A at $2.79 per share, comprised
of approximately $2.38 in cash and approximately $0.41 in the form of a new
issue of registered preferred stock to be issued by ROHN.
On November 3, 1998, ROHN's Board met and received a report and analysis
from DLJ concerning the revised proposals. DLJ reported that a revised proposal
would also be submitted by Bain, the structure of which would be similar to its
previous proposal, and would value ROHN shares at $3.78. Management of ROHN
provided a preliminary analysis concerning synergies that could be achieved by
combining ROHN and PiRod. The Board directed DLJ to obtain additional details
regarding the Bain proposal and to conduct further analysis. DLJ also advised
the Board that high yield bond or bank financing for a self-recapitalization
did not appear to be a positive alternative for ROHN at the time.
On November 4, 1998, Bain submitted a revised written proposal. This revised
proposal valued the equity securities of ROHN at $200 million, or $3.78 a
share, and proposed that an aggregate of $120 million would be available to
fund the cash portion of the merger consideration. The allocation of common
stock would be pursuant to a fixed ratio based on a pre-transaction equity
valuation of $200 million for ROHN and $30 million for PiRod. After the merger,
the ROHN stockholders would own 72.7% of the surviving corporation and PiRod
stockholders would own 27.3%. The transaction would be financed by ROHN's
incurring approximately $178 million of new senior indebtedness and the
rollover of $12 million of PiRod existing subordinated indebtedness.
On November 15, 1998, representatives of Bain, certain trustees of the Trust
and the Chief Executive Officers of PiRod and ROHN met to discuss the proposed
transactions. The possible terms of a stockholders agreement between Bain and
the Trust were also discussed.
On November 16, 1998, the ROHN Board of Directors met, and DLJ presented a
report concerning the details of Bain's November 4 proposal. During this
meeting, management also provided a further analysis of the efficiencies and
synergies that could be achieved by combining ROHN and PiRod. The Board
authorized management to proceed with due diligence with respect to the
proposed Bain transaction and the negotiation of a merger agreement and related
documents.
On November 20, 1998, ROHN and the Trust agreed with Bain and PiRod that for
a period commencing on November 20 and ending on December 15, 1998, neither
ROHN nor the Trust would solicit offers for sale or discuss a possible merger,
sale or other similar transaction with any other party or provide information
to any other party in that connection unless a proposal was received that could
reasonably be expected to lead to a proposal superior to that proposed by Bain.
That agreement was extended to December 31, 1998.
During the period of November 20, 1998 to December 22, 1998, both ROHN and
PiRod conducted due diligence reviews of each other and they and their
respective advisers negotiated the terms of definitive agreements concerning
the proposed transaction. The Trust and Bain and their advisers also negotiated
the terms of the Trust Voting Agreement and the ROHN Stockholders Agreement. On
December 21 and December 22, 1998, the ROHN Board of Directors met. During that
meeting, the ROHN Board of Directors received a presentation from DLJ
concerning the negotiated terms of the Bain proposal, an overview of PiRod, a
valuation of ROHN and a prospective valuation of the stock of the combined
companies. At the conclusion of the meeting, the Board unanimously approved,
and recommended stockholder approval of, the Merger Agreement and related
agreements and documents.
Recommendation of ROHN's Board of Directors; ROHN's Reasons for the Merger
The Board of Directors of ROHN believes that the Merger is in the best
interests of ROHN and its stockholders. Accordingly, the Board of Directors of
ROHN has approved the Merger Agreement and unanimously recommends that ROHN's
stockholders approve the Merger Agreement.
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The Merger Agreement provides ROHN stockholders with two choices: (1) to
elect to receive $3.78 in cash ("Cash Consideration") per share for each share
of ROHN common stock submitted with an Election Form, subject to proration as
provided in the Merger Agreement in the event that the number of ROHN shares so
submitted exceeds 27,777,777 or such lesser number of shares permitted by
Section 1.6.4 of the Merger Agreement, see "The Merger--Capitalization of ROHN
and PiRod and Exchange of Shares"; or (2) to retain ROHN Shares. The Board
takes no position on the choice that should be made by ROHN stockholders. That
election will depend on the circumstances and investment objectives of each
individual stockholder. In reaching its determination to approve the Merger and
the Merger Agreement, including the election provided to stockholders, the ROHN
Board of Directors consulted with its financial adviser and ROHN management and
considered a number of factors, which are discussed below.
The cash election option would allow ROHN stockholders to receive cash for
their shares, subject to proration, at a premium over recent market price
levels of ROHN common stock prior to the announcement and signing of the Merger
Agreement, without incurring transaction costs. Based on the closing price of
ROHN common stock on December 22, 1998, the last trading day before such
announcement, the premium represented by the Cash Consideration was
approximately 33% over the closing price of ROHN common stock on such trading
date, and approximately 37% over the average closing price of ROHN common stock
for the 90 trading days prior to the date of the announcement. DLJ, ROHN's
financial adviser, delivered an opinion to the Board that, as of December 22,
1998 and based on and subject to the matters referred to in its opinion, the
Cash Consideration to be paid for shares of ROHN common stock and/or the shares
of ROHN common stock retained by ROHN stockholders (the "Consideration
Package") are fair to ROHN's stockholders from a financial point of view. See
"--Opinion of ROHN's Financial Adviser." Factors that individual ROHN
stockholders may wish to consider in determining whether to elect the Cash
Consideration include: the original cost of their shares, the tax basis of
their shares, their tax situation and their investment objectives. See "--
Certain Federal Income Tax Consequences."
ROHN stockholders who elect to retain all or part of their ROHN shares and
ROHN stockholders who retain some portion of their shares as a result of
proration under the Cash Consideration option will retain some or all, as the
case may be, of their shares in ROHN, the surviving corporation in the Merger.
The ROHN Board believes that the Merger will provide ROHN stockholders with a
financially attractive opportunity for continued equity participation in a
larger combined enterprise focused on the telecommunications infrastructure
market.
In reaching its determination to approve and adopt the Merger Agreement, the
ROHN Board of Directors considered a number of factors and the potential
synergies that would result from a merger with PiRod. The ROHN Board of
Directors considered, among other things:
. the value of the Cash Consideration to be received by ROHN stockholders,
including the fact that the Cash Consideration represents a premium of
approximately 33% over the closing price of ROHN common stock on the last
trading day before announcement of the Merger and approximately 37% over
the average closing price of ROHN common stock for the 90 trading days
prior to the date of the announcement
. the terms of the Merger, including
. the amount and form of consideration to be received by ROHN
stockholders
. the structure of the Merger permitting ROHN stockholders to elect cash
for all or part of their shares on a capital gains tax basis, or to
retain on a tax-free basis their shares in a larger combined business,
and
. the Merger Agreement provisions permitting ROHN to furnish information
to, and enter into discussions and negotiations with, and accept an
alternative offer from, a party other than PiRod provided that the
Board of Directors of ROHN determines in good faith, after consultation
with its legal and financial advisers, that such proposal is superior
to the Merger
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. the results of operations, financial conditions and businesses of ROHN
and PiRod, both on an historical and prospective basis giving effect to
the Merger, the contemplated efficiencies resulting from the Merger and
their respective business plans, and certain of the respective risks
involved in meeting such plans
. other efforts to sell the Trust's shares of ROHN common stock and to sell
ROHN as an entirety
. the relative attractiveness of the Merger compared to alternatives and
the expressed desire of the Trust to pursue the Merger
. the complementary nature of the product lines of ROHN and PiRod, and
their respective customer bases
. the potential synergies and efficiencies flowing from combination of the
two companies, including combining certain engineering, manufacturing,
sales, marketing and administrative functions
. the larger combined enterprise resulting from the Merger, with the
addition of PiRod's experienced management, technical expertise and
customer service capabilities
. the opinion of DLJ that the Consideration Package is fair, from a
financial point of view, to ROHN stockholders and the financial analysis
conducted by DLJ in reaching its opinion, and
. the views of ROHN's management.
In reaching the decision to approve the Merger Agreement, the ROHN Board was
most strongly influenced by the amount and form of consideration which ROHN
stockholders could elect, the relative attractiveness of the Merger compared to
alternatives and the Trust's expressed desire to pursue the Merger, the
historic and prospective financial positions, business and competitive
positions of ROHN and PiRod, their respective business plans and forecasts and
certain of the respective risks involved in meeting such forecasts, and the
views of ROHN's management and financial adviser.
In view of the wide variety of factors considered by ROHN's Board of
Directors in connection with its evaluation of the Merger, the ROHN Board of
Directors did not find it practicable to, and did not, quantify or otherwise
assign relative weights to those factors. Although ROHN's Board did not reach
specific conclusions regarding any of the above individual factors, on balance
each such factor positively affected the ROHN Board's decision to approve the
Merger.
FOR THE REASONS DISCUSSED ABOVE, THE ROHN BOARD OF DIRECTORS HAS DETERMINED
THAT THE TERMS OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY ARE IN THE BEST INTERESTS OF ROHN AND ITS STOCKHOLDERS. ACCORDINGLY,
THE ROHN BOARD OF DIRECTORS RECOMMENDS THAT ROHN STOCKHOLDERS VOTE FOR THE
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
Opinion of ROHN's Financial Adviser
DLJ was retained by ROHN to act as its financial adviser in connection with
the Merger. In connection with such engagement, ROHN requested that DLJ
evaluate the fairness, from a financial point of view, of the consideration to
be received and/or retained by ROHN's shareholders in the Merger. On December
22, 1998, DLJ delivered its written opinion (the "DLJ Opinion") to ROHN's Board
of Directors that, as of such date and based upon and subject to the
assumptions, limitations and qualifications set forth in such opinion, the
Consideration Package to be received and/or retained by the holders of ROHN
shares pursuant to the Merger Agreement was fair to such holders from a
financial point of view. For purposes of the DLJ Opinion, the "Consideration
Package" was defined as the cash consideration payable to holders of ROHN
shares in the Merger plus the portion of ROHN shares to be retained by such
holders in the Merger.
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In arriving at the DLJ Opinion, DLJ reviewed the draft dated December 17,
1998 of the Merger Agreement, as well as the draft dated December 16, 1998 of
the Trust Voting Agreement, and the draft dated December 17, 1998 of the PiRod
Shareholders Voting Agreement. DLJ also reviewed financial and other
information that was publicly available or furnished to it by ROHN and PiRod,
including information provided during discussions with their respective
managements. Included in the information provided during discussions with the
respective managements were certain financial projections of ROHN for the
period beginning January 1, 1998 and ending December 31, 2002 prepared by the
management of ROHN and certain financial projections of PiRod for the period
beginning January 1, 1998 and ending December 31, 2002 prepared by the
management of PiRod and certain financial projections for the combined company
for the period beginning January 1, 1998 and ending December 31, 2002 prepared
by the managements of ROHN and PiRod. In addition, DLJ compared certain
financial and securities data of ROHN and certain financial data of PiRod with
various other companies whose securities are traded in public markets, reviewed
the historical stock prices and trading volumes of ROHN shares, reviewed prices
and premiums paid in certain other business combinations and conducted such
other financial studies, analyses and investigations as DLJ deemed appropriate
for purposes of the DLJ Opinion.
In rendering its opinion, DLJ relied upon and assumed, without independent
verification, the accuracy and completeness of all of the financial and other
information that was available to it from public sources, that was provided to
it by ROHN and PiRod and their respective representatives, or that was
otherwise reviewed by it. In particular, DLJ relied upon the estimates of the
management of ROHN of the operating synergies achievable as a result of the
Merger. With respect to the financial projections supplied to it, DLJ assumed
that they have been reasonably prepared on the basis reflecting the best
currently available estimates and judgments of the management of (i) ROHN and
PiRod as to the future operating and financial performance of ROHN and PiRod,
respectively, and (ii) the managements of ROHN and PiRod as to the future
operating and financial performance of the combined company. In addition, DLJ
assumed that $105 million will be available to be paid out to holders of ROHN
shares pursuant to the cash election and that such amount will have been so
paid out. DLJ did not assume any responsibility for making an independent
evaluation of any assets or liabilities or for making any independent
verification of any of the information reviewed by it.
The DLJ Opinion was necessarily based on economic, market, financial and
other conditions as they existed on, and on the information made available to
DLJ as of, the date of the DLJ Opinion. Although subsequent developments may
affect the DLJ Opinion, DLJ does not have any obligation to update, revise or
reaffirm the DLJ Opinion. However, if the cash available for distribution to
ROHN stockholders in the Merger is less than $105 million at the Effective
Time, it is a condition to ROHN's obligation to consummate the Merger that ROHN
and the Trust receive a DLJ fairness opinion as of the date of the Effective
Time. See "The Merger--Capitalization of ROHN and PiRod and Exchange of Shares"
and "--Conditions for Merger and Other Provisions." The DLJ Opinion was
prepared for ROHN's Board of Directors and was directed only to the fairness
from a financial point of view of the Consideration Package to be received
and/or retained by ROHN shareholders. DLJ did not express any opinion as to
what the value of the ROHN shares will be at the time of the consummation of
the Merger nor did DLJ express any opinion as to the price at which ROHN shares
will trade at any time (whether before or after consummation of the Merger and
whether or not the Merger is consummated). DLJ was not asked to, and the DLJ
Opinion does not, address the relative merits of the Merger and the other
business strategies being considered by ROHN's Board of Directors, nor does it
address the Board's decision to proceed with the Merger. The DLJ Opinion does
not constitute a recommendation to any holders of ROHN shares as to how such
holders of ROHN shares should vote on the Merger. The DLJ Opinion expresses no
opinion as to the allocation of the consideration to be received or retained by
ROHN shareholders or any related tax implications. No other limitations were
imposed by ROHN on DLJ with respect to the investigation made or procedures
followed by DLJ in rendering its opinion.
THE FULL TEXT OF THE DLJ OPINION WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY DLJ IS ATTACHED
HERETO AS APPENDIX C. HOLDERS OF ROHN SHARES ARE URGED TO READ THE
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DLJ OPINION CAREFULLY AND IN ITS ENTIRETY. THE DLJ OPINION IS DIRECTED ONLY TO
THE FAIRNESS OF THE CONSIDERATION PACKAGE FROM A FINANCIAL POINT OF VIEW, AND
DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER. THE SUMMARY OF THE DLJ OPINION
SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In connection with its opinion, DLJ performed a variety of financial and
comparative analyses, including those described below. The summary set forth
below does not purport to be a complete description of the analyses performed
by DLJ but describes, in summary form, the principal elements of the analyses
performed by DLJ. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances.
Therefore, such an opinion is not readily susceptible to summary description.
Each of the analyses conducted by DLJ was carried out in order to provide a
different perspective on the Merger and to add to the total mix of information
available. DLJ did not form a conclusion as to whether any individual analysis,
considered in isolation, supported or failed to support an opinion as to
fairness from a financial point of view. Rather, in reaching its conclusion,
DLJ considered the results of the analyses in light of each other and
ultimately reached its opinion based on the results of all analyses taken as a
whole. Accordingly, notwithstanding the separate factors summarized below, DLJ
has indicated to the Board of Directors of ROHN that it believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and the factors considered by it, without considering all analyses and
factors, could create an incomplete view of the evaluation process underlying
its opinion.
In connection with its analyses, DLJ made numerous assumptions with respect
to ROHN, PiRod, industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
ROHN and PiRod. Accordingly, the analyses performed by DLJ are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by such analyses. In addition, analyses
relating to the value of businesses or securities do not purport to be
appraisals or to reflect prices at which businesses or securities actually may
be sold. Therefore, such analyses and estimates are inherently subject to
substantial uncertainty. The DLJ Opinion and underlying financial analyses were
only one of the many factors considered by the ROHN Board of Directors in its
evaluation of the Merger and should not be viewed as determinative of the view
of the ROHN Board of Directors with respect to the Consideration Package or the
Merger.
Comparable Publicly Traded Company Analysis
DLJ analyzed selected historical and projected operating information, stock
market data and financial ratios for certain publicly traded companies that DLJ
deemed to be comparable to ROHN (the "Public Comparables"). The Public
Comparables are: (i) Valmont Industries; and (ii) Andrew Corporation. DLJ
analyzed the equity value of each of the Public Comparables (using stock prices
as of December 17, 1998), measured as a multiple of selected financial data,
and the enterprise value of each of the Public Comparables (enterprise value
defined as being equity value plus long-term debt plus the liquidation
preference of the preferred stock, if any, plus the value of minority
interests, if any, minus cash and short-term investments), measured as a
multiple of selected financial data. In examining the Public Comparables, DLJ
analyzed the enterprise value of the companies as a multiple of each company's
latest twelve month ("LTM") revenues, LTM earnings before interest, taxes
depreciation and amortization ("EBITDA") and LTM earnings before interest and
taxes ("EBIT") and then applied those same multiples to ROHN's: (i) LTM
revenues, LTM EBITDA and LTM EBIT; (ii) 1998 estimated revenues, 1998 estimated
EBITDA and 1998 estimated EBIT; and (iii) fourth quarter 1998 estimated
revenues annualized, fourth quarter 1998 estimated EBITDA annualized and fourth
quarter 1998 estimated EBIT annualized.
DLJ's analysis of the enterprise value as a multiple of: (i) revenues
yielded a range of multiples of 0.8x to 1.6x with an average of 1.2x; (ii)
EBITDA yielded a range of multiples of 6.8x to 6.9x with an average of 6.9x;
and (iii) EBIT yielded a range of multiples of 8.4x to 8.9x with an average of
8.7x.
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Based on the results of the Public Comparables analysis, DLJ arrived at a
valuation range of $3.24 per share to $3.93 per share, representing enterprise
value multiples of 6.8x fourth quarter 1998 estimated annualized EBITDA to 6.9x
LTM EBITDA, respectively.
Comparable M&A Transaction Analysis
DLJ reviewed five selected acquisitions involving companies which DLJ deemed
to be comparable to ROHN (the "M&A Transactions"). The M&A Transactions are:
(i) Baker Capital Corp. / Fort Worth Tower; (ii) Bain Capital, Inc. / PiRod
Holdings; (iii) Thomas & Betts Corporation / Augat, Inc.; (iv) Textron, Inc. /
Elco Industries, Inc.; and (v) Valmont Industries / Microflect Company. In
examining these acquisitions, DLJ analyzed the enterprise value of the
companies as a multiple of each company's LTM EBITDA and then applied those
same multiples to ROHN's: (i) LTM EBITDA; (ii) 1998 estimated EBITDA; and (iii)
fourth quarter 1998 estimated EBITDA annualized.
DLJ's analysis of the enterprise value as a multiple of EBITDA yielded a
range of multiples of 6.7x to 8.8x with an average of 7.6x.
Based on the results of the M&A Transactions analysis, DLJ arrived at a
valuation range of $3.16 per share to $5.07 per share, representing enterprise
value multiples of 6.7x fourth quarter 1998 estimated EBITDA annualized to 8.8x
LTM EBITDA, respectively.
No company, transaction or business used in the "Comparable Publicly Traded
Company Analysis" or the "Comparable M&A Transaction Analysis" is identical to
ROHN, PiRod or the Merger. Accordingly, an analysis of the foregoing is not
mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operation characteristics and other
factors that could affect the acquisition, public trading or other values of
the Public Comparables, the M&A Transactions or the business segment, company
or transaction to which they are being compared.
Discounted Cash Flow Analysis--ROHN Standalone
DLJ performed a discounted cash flow ("DCF") analysis based on base case
projections provided by ROHN for the years ending December 31, 1999 through
December 31, 2002. The projections for ROHN represent ROHN's standalone
projections prepared by ROHN management. DLJ applied a range of discount rates
of 11.0% to 13.0% and terminal multiples of 5.25x to 6.25x and discounted the
cash flow stream back to December 31, 1998.
Based on the results of the discounted cash flow analysis, DLJ arrived at a
valuation range of $3.67 per share to $4.52 per share, representing EBITDA
multiples and discount rates of 5.25x and 13% to 6.25x and 11.0%, respectively.
Discounted Cash Flow Analysis -- Combined Company
DLJ performed a DCF analysis based on base case projections provided by ROHN
and PiRod for the years ending December 31, 1999 through December 31, 2002. The
projections for ROHN represent ROHN's standalone projections prepared by ROHN
management. The projections for PiRod represent PiRod's standalone projections
prepared by PiRod management. The projections assume that the combined company
realizes synergies of $2.7 million in 1999 and $7.8 million in all years
thereafter. In addition, the projections assume that there are $4.0 million of
cash costs to cover severance and moving costs in 1999. DLJ applied a range of
discount rates of 11.0% to 13.0% and terminal multiples of 6.0x to 8.0x and
discounted the cash flow stream back to December 31, 1998.
Based on the results of the discounted cash flow analysis, DLJ arrived at a
valuation range of $4.86 per share to $8.26 per share, representing EBITDA
multiples and discount rates of 6.0x and 13.0% to 8.0x and 11.0%, respectively.
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Premiums Paid Analysis
DLJ analyzed premiums paid in 135 other business combinations of similar
size ($100 million- $300 million) announced since January 1, 1996. These
transactions involved companies that were not necessarily comparable to ROHN or
PiRod. DLJ's analysis of these results determined that the median premiums paid
1-day, 1-week and 1-month prior to announcement were 22.3%, 28.9% and 31.6%.
Based on the results of the premiums paid analysis, DLJ arrived at a
valuation range of $3.52 per share to $4.03 per share, representing stock price
premiums of 22.3% over the closing sale price of ROHN shares on December 16,
1998 and 31.6% over the closing sale price of ROHN shares on November 17, 1998,
respectively.
Pursuant to the terms of an engagement agreement dated March 27, 1998, ROHN
agreed to pay DLJ: (i) a retainer fee of $150,000, payable promptly upon
execution of such engagement; and (ii) a fee of $500,000 at the time DLJ
delivered to the ROHN Board of Directors the DLJ Opinion. Upon consummation of
the Merger, DLJ will receive an additional fee equal to one percent of the
aggregate amount of consideration received and/or retained by ROHN shareholders
in the Merger less any fees previously paid to DLJ pursuant to clauses (i) and
(ii) of the preceding sentence. In addition, ROHN has agreed to indemnify DLJ
and certain related persons against certain liabilities in connection with its
engagement, including liabilities under U.S. federal securities laws.
In addition to its retention by ROHN, DLJ was retained by the Trust to
deliver an opinion to the Trust substantially similar to the DLJ Opinion. DLJ
delivered such an opinion to the Trust on December 22, 1998. DLJ is not
receiving any additional consideration for the delivery of this opinion.
ROHN retained DLJ as its financial adviser because it is an internationally
recognized investment banking firm that has substantial experience in the
industries in which ROHN competes and, through its work for the Trust and
otherwise, is familiar with ROHN and its businesses. As part of its investment
banking business, DLJ is regularly engaged in the valuation of businesses and
securities in connection with mergers, acquisitions, underwritings, sales and
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes.
In the ordinary course of business, DLJ and its affiliates may own or
actively trade the securities of ROHN for their own accounts and for the
accounts of their customers and, accordingly, may at any time hold a long or
short position in ROHN securities. DLJ has performed investment banking and
other services for Bain Capital, Inc., owner of approximately 55.0% of the
outstanding common stock of PiRod and approximately 13% of the outstanding
common stock of the combined company (after giving effect to the Merger), in
the past, and has received usual and customary compensation for such services.
Recommendation of PiRod's Board of Directors; PiRod's Reasons for the Merger
By written consent, dated December 18, 1998, the PiRod Board of Directors
unanimously determined that the terms of the Merger Agreement were fair to, and
in the best interests of, PiRod and its stockholders and approved and adopted
the Merger Agreement. In addition, the PiRod Board of Directors unanimously
determined to recommend to the stockholders of PiRod that such stockholders
vote to approve and adopt the Merger Agreement. In reaching its determination
to approve the Merger, the PiRod Board of Directors concluded that holding ROHN
shares represented a more favorable investment opportunity than holding PiRod
shares, after taking into account the risks inherent in each investment. In
evaluating such investment opportunity, the PiRod Board of Directors considered
all relevant factors and information, including
. the fact that the exchange ratios of 3.7282 and 61.6859 ROHN shares per
share of PiRod class A common stock and PiRod class L common stock,
respectively, represent an attractive valuation of PiRod
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. the fact that stockholders of PiRod would own, based on the exchange
ratios, approximately 23% of the outstanding ROHN shares after giving
effect to the Merger
. the history of the negotiations with ROHN and the belief of the members
of the PiRod Board of Directors that the financial terms reflected in the
Merger Agreement represented the most attractive financial terms that
could be obtained from ROHN
. the relative attractiveness of the Merger as compared to other
alternatives discussed from time to time by the PiRod Board of Directors
. the importance of size and national scope in achieving a stronger
competitive position and profitability
. the opportunity for stockholders of PiRod to become holders of ROHN
shares, which the PiRod Board of Directors believe will afford such
stockholders greater long-term liquidity than PiRod shares since the ROHN
shares are publicly traded
. the financial condition, assets, results of operations, business and
prospects of PiRod and ROHN and the risks inherent in achieving those
prospects (for a discussion of certain such risks, see "Risk Factors")
. the increased growth potential that may result from a combination of
PiRod and ROHN, including as a result of
. the greater financial stability and strength of the combined company
. the opportunity through greater marketing resources to raise customer
awareness of the combined company and its reputation
. the greater technical expertise and customer service capabilities of
the combined company, and
. the complementary nature of the product lines of PiRod and ROHN, and
their respective customer bases
. the terms and conditions of the Merger Agreement and the Voting Agreement
with the Trust (see
"--Voting Agreements"), including the nature of the parties'
representations, warranties, covenants and agreements (which the PiRod
Board of Directors believed would provide reasonably adequate certainty
that PiRod would be able to require ROHN to consummate the Merger), as
well as the provisions of the Merger Agreement that permit PiRod to
consider additional bona fide third party offers to acquire PiRod and
permit PiRod to provide information to and negotiate with such parties
and, subject to the payment of significant fees and expenses to ROHN and
the determination by the PiRod Board of Directors in good faith, after
consultation with its legal and financial advisers, that such proposal is
superior to the Merger, to terminate the Merger Agreement
. the terms and conditions of the PiRod Voting Agreement, in which
stockholders of PiRod owning approximately 55% of PiRod's shares granted
a proxy to ROHN to vote their PiRod shares in favor of the Merger
Agreement
. the regulatory approvals required to consummate the Merger and the
prospects for receiving such approvals in a timely manner
. the advice of Kirkland & Ellis, special counsel to PiRod, that the Merger
is expected to be treated as a tax-free reorganization for federal income
tax purposes (see "--Certain Federal Income Tax Considerations"), and
. the risk that the Merger would not be consummated, and the potential
adverse effects on PiRod's business, operations and financial condition
should it not be possible to consummate the Merger (including adverse
effects resulting from the expenses incurred by PiRod in connection with
the Merger and the possibility of having to pay termination fees to ROHN,
as well as adverse effects resulting from possible loss of customers and
employees in reaction to the announcement or as a result of management
being distracted from operating the business while working to consummate
the Merger).
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The foregoing discussion of the information and factors considered by the
PiRod Board of Directors is not intended to be exhaustive, but is believed to
include all material factors considered by the PiRod Board of Directors. In
light of the number and variety of information and factors the PiRod Board of
Directors considered in connection with its evaluation of the Merger, the PiRod
Board of Directors did not find it practicable to, and did not, assign any
specific or relative weights to the foregoing factors, and, individual
directors may have given differing weights to different factors. For a
discussion of the interests of certain members of PiRod's management and the
PiRod Board of Directors in the Merger, see "--Interests of Certain Persons in
the Merger." The PiRod Board of Directors recognized such interests and
determined that such interests neither supported nor detracted from the
fairness of the Merger to PiRod's stockholders.
THE PIROD BOARD OF DIRECTORS HAS APPROVED AND ADOPTED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY BY A UNANIMOUS VOTE AND BELIEVES THAT
THE TERMS OF THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, PIROD AND
ITS STOCKHOLDERS. ACCORDINGLY, THE PIROD BOARD OF DIRECTORS RECOMMENDS THAT
PIROD STOCKHOLDERS VOTE TO APPROVE AND ADOPT THE MERGER AGREEMENT.
Financing
The total amount of funds required by ROHN in connection with the Merger and
related transactions is expected to be approximately $179.3 million, consisting
of (i) up to $105.0 million to ROHN stockholders electing cash, (ii)
approximately $11.5 million to refinance ROHN's existing indebtedness, (iii)
approximately $47.9 million to refinance PiRod's existing indebtedness, and
(iv) approximately $14.9 million to pay estimated fees and expenses (including
approximately $1.9 million in prepayment penalties). The proceeds to pay such
amounts will be obtained from new senior credit facilities (described below)
and cash on hand of ROHN and PiRod of up to $12.8 million.
On December 21, 1998, J.P. Morgan Securities Inc. ("JPMSI") and Morgan
Guaranty Trust Company of New York ("Morgan" or the "Initial Lender") delivered
a Commitment Letter (the "Commitment Letter") to PiRod. Pursuant to the
Commitment Letter, but subject to the conditions set forth therein, Morgan has
agreed to act as administrative agent (in such capacity, the "Agent") for the
proposed senior secured term loan and revolving credit facilities aggregating
up to $190,000,000 (collectively, the "Facilities"), including (a) an $85.0
million Tranche A term loan, (b) a $75.0 million Tranche B term loan, and (c) a
$30.0 million revolving credit facility (the "Revolving Credit Facility"). The
Initial Lender intends to syndicate a portion of the Facilities to other banks
or financial institutions (together with the Initial Lender, the "Lenders").
The proceeds of the Facilities will be used (i) to pay up to $105.0 million
to ROHN stockholders electing cash, (ii) to refinance an aggregate of
approximately $59.4 million of outstanding indebtedness of ROHN and PiRod (and
pay premiums in connection therewith of approximately $1.9 million), and (iii)
for working capital and general corporate purposes, including the payment of
fees and expenses incurred by ROHN and PiRod in connection with the Merger and
related transactions; provided, however, that no more than $6.5 million of the
revolving credit facility may be used to fund such expenditures described in
clauses (i) and (ii) above.
The Initial Lender's obligations under the Commitment Letter are subject to,
among other things, (i) the negotiation and execution of a definitive credit
agreement in respect of the Facilities (the "Credit Agreement") and related
documents that are satisfactory in form and substance to Morgan, (ii) the
satisfactory completion by Morgan of its legal, environmental (including as to
asbestos liabilities), and reasonable customer call due diligence with respect
to ROHN, PiRod and their respective subsidiaries, (iii) the absence of any
material adverse change in the consolidated financial condition, results of
operations, business, assets, liabilities or value of ROHN and its subsidiaries
taken as a whole or PiRod and its subsidiaries taken as a whole, in each case
since December 31, 1997; (iv) Morgan shall not have received, or discovered,
new or additional information which is reflective of a material adverse change
from that which would have existed if the developments or the
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disclosures in such newly received or discovered, or additional, information
had not occurred or been in existence, and (v) the absence after December 21,
1998 of any material change in or material disruption of financial, bank
syndication or capital market conditions (from those in existence on December
21, 1998) that in the good faith judgment of Morgan or JPMSI could reasonably
be expected to have a material adverse effect on the syndication of the
Facilities.
The Commitment Letter contemplates that the definitive Credit Agreement will
contain terms and conditions which are customary in transactions of this type,
including, without limitation, the following:
. Borrower. The borrower under the Facilities will be ROHN, as the
surviving corporation in the Merger (the "Borrower")
. Tranches. The Facilities will consist of (i) the $85.0 million Tranche A
term loan, (ii) the $75.0 million Tranche B term loan, and (iii) the
$30.0 million Revolving Credit Facility
. Interest Rate. Amounts outstanding under the Facilities will bear
interest, at the option of the Borrower, at a rate per annum equal to
either: (i) the London interbank offered rate (adjusted for reserves)
("LIBOR") or (ii) the Base Rate, in each case, plus an Applicable Margin.
The "Base Rate" is defined as the higher of (x) Morgan's prime rate, and
(y) 0.50% per annum over the federal funds rate
The Applicable Margin for each of the Tranche A term loan and the
Revolving Credit Facility is initially fixed at 3.00% for LIBOR loans and
2.00% for Base Rate Loans. The Applicable Margin for the Tranche B term
loan is initially fixed at 3.75% for LIBOR loans and 2.75% for Base Rate
Loans. Such Applicable Margins will be subject to adjustment from time to
time in accordance with a pricing grid to be negotiated
. Term. Borrowings under the Tranche A term loan will be amortized
quarterly over the six year term of such term loan in accordance with an
agreed schedule. Borrowings under the Tranche B term loan will have no
substantial amortization until after the sixth year. Thereafter, the
Tranche B term loan will be amortized quarterly between the sixth and
eighth years of such term loan in accordance with an agreed schedule. The
Revolving Credit Facility will be available on a revolving basis for a
period of six years
. Guarantors. All of the Borrower's obligations under the Facilities will
be fully and unconditionally guaranteed by all present and future
domestic subsidiaries of the Borrower
. Security. The Facilities will be secured by a first priority security
interest in (i) all material tangible and intangible assets of the
Borrower and its domestic subsidiaries, including, without limitation,
intellectual property, real property and all of the capital stock owned
by the Borrower and each of its domestic subsidiaries (assuming that
Borrower's industrial revenue bonds are repaid), and (ii) 65% of the
issued and outstanding voting stock, and 100% of the non-voting stock, of
each first-tier foreign subsidiary of the Borrower
. Conditions. The obligations of the Lenders under the Credit Agreement to
provide the initial advances pursuant to the Facilities will be subject
to the satisfaction of customary conditions precedent for leveraged
financings generally, including, without limitation, the following:
. the Merger and the refinancing of outstanding indebtedness of ROHN and
PiRod (the "Refinancing") on the terms and conditions described herein
shall have been consummated prior to March 31, 1999
. the outstanding debt of ROHN and PiRod and each subsidiary, except as
specifically excluded, shall be retired, and all liens securing the
same shall be discharged; provided, however, that the amount used to
retire such outstanding debt shall not exceed $61.3 million
. receipt by the Lenders of a pro forma balance sheet and income
statement giving effect to the Merger, the Refinancing and all related
transactions, which pro forma financial statements shall demonstrate
that the covenants contained in the Credit Agreement are satisfied
. each of Morgan and JPMSI shall be satisfied that, taking into account
demonstrable (to the satisfaction of Morgan and JPMSI) cost savings to
be achieved within the first twelve months following the consummation
of the Merger, pro forma EBITDA (as defined in the Credit Agreement)
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for the period of four consecutive fiscal quarters of the Borrower most
recently ended prior to the date of consummation of the Merger would be
at least that amount so that the Senior Debt Leverage Ratio (as defined
in the Credit Agreement) after giving effect to the Merger and the
Refinancing would in no event exceed 3.94 to 1.0. If Morgan and JPMSI
are not reasonably satisfied that the Senior Debt Leverage Ratio is (and
will remain) equal to or less than 3.94 to 1.0, then actions
satisfactory to Morgan and JPMSI (including reducing the cash
consideration available to be paid to shareholders of ROHN electing
cash) will be required to be taken so that the Senior Debt Leverage
ratio is reduced to 3.94 to 1.0
. the absence of a material adverse change to the consolidated financial
condition, results of operations, business, assets, liabilities or
value of ROHN and its subsidiaries taken as a whole or PiRod and its
subsidiaries taken as a whole, in each case since December 31, 1997
. receipt by the Lenders of a satisfactory solvency analysis and
customary legal opinions; and
. absence of material litigation
. Covenants and Events of Default. The Credit Agreement will contain
affirmative and negative covenants and events of default, in each case
which are customary for credit facilities of the size, type and purpose
of the Facilities. Such affirmative and negative covenants will, among
other matters, limit certain activities of the Borrower and require it to
satisfy certain ongoing financial requirements. Such events of default
will include, among other matters, a cross-default to other indebtedness
of the Borrower and its subsidiaries
. Expiration. The obligations of the Initial Lenders under the Commitment
Letter will expire and terminate automatically if loan documentation
satisfactory in form and substance to the Initial Lenders and their
respective counsel is not executed on or before March 31, 1999
Capitalization of ROHN and PiRod and Exchange of Shares
The authorized capital stock of ROHN consists of 60,000,000 shares of common
stock, par value $.01 per share. As of February 1, 1999, [52,846,009] shares of
ROHN common stock were issued and outstanding. PiRod's authorized capital stock
consists of 20,000,000 shares of common stock: 19,178,000 shares of class A-1,
235,000 shares of class A-2, 61,000 shares of class A-3, 35,000 shares of class
A-4, 25,000 shares of class A-5, 355,000 shares of class A-6, 21,000 shares of
class A-7 and 90,000 shares of class L. PiRod's issued and outstanding shares
of common stock consist of 88,289 shares of class A-1, 232,099 shares of class
A-2, 60,146 shares of class A-3, 28,420 shares of class A-4, 20,653 shares of
class A-5, 351,497 shares of class A-6 and 76,776 shares of class L. The shares
of class A-1, class A-2, class A-3, class A-4, class A-5, class A-6 and class
A-7 common stock of PiRod are collectively referred to as "PiRod class A common
stock."
Upon the proper filing with the Secretary of State of the State of Delaware
of a certificate of merger, the Merger will become effective (the "Effective
Time"), and without any action taken by the holder thereof, each outstanding
share of PiRod class A common stock will be converted into 3.7282 shares of
ROHN common stock, and each outstanding share of PiRod class L common stock
will be converted into 61.6859 shares of ROHN common stock.
The aggregate number of ROHN shares which may be converted into the right to
receive $3.78 in cash will be limited by the cash available, which is defined
to be the least of (A) $105.0 million, (B) the product of $3.78 and the total
number of ROHN shares for which cash is elected and (C) the total borrowings
made available to ROHN under the Financing for purposes of cashing shares plus
$12.8 million minus the sum of (a) the total indebtedness of ROHN and PiRod to
be repaid in connection with the Merger, including any unpaid interest, premium
and prepayment penalties, (b) the good faith estimate of the amount of fees and
expenses incurred by ROHN and PiRod in connection with the Merger and the
transactions contemplated thereby (including all investment banking, legal and
accounting fees and expenses) and (c) the difference, if any, between the
amount of cash-on-hand of ROHN as the surviving corporation at the Effective
Time and $12.8 million (but only to the extent such amount of cash-on-hand is
less than $12.8 million).
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If the cash available for cashing out shares at the Effective Time is less
than $105.0 million, the obligation of ROHN to effect the Merger is subject to
the condition that ROHN and the Trust shall each have received a fairness
opinion as of the date of the Effective Time from DLJ to the effect that the
consideration to be received and/or retained by the holders of ROHN shares
(and, in the case of the Trust, the Trust) pursuant to the Merger Agreement is
fair to such holders (and, if applicable, the Trust) from a financial point of
view.
Election Procedure
An Election Form is being mailed together with this Proxy
Statement/Prospectus to each person who was a holder of ROHN shares on the
Record Date. Each such holder may submit an Election Form specifying the number
of ROHN shares that such holder desires to have converted into Cash
Consideration, subject to proration.
ANY CASH ELECTION WILL HAVE BEEN PROPERLY MADE ONLY IF THE EXCHANGE AGENT
HAS RECEIVED AT ITS DESIGNATED OFFICE (AS SET FORTH IN THE ELECTION FORM), BY
5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, MARCH 19, 1999, THE BUSINESS DAY
PRECEDING THE MEETING (THE "ELECTION DATE"), AN ELECTION FORM PROPERLY
COMPLETED AND SIGNED AND ACCOMPANIED BY THE CERTIFICATES FOR THE ROHN SHARES TO
WHICH THE ELECTION FORM RELATES, PROPERLY ENDORSED OR OTHERWISE IN PROPER FORM
FOR TRANSFER (OR ACCOMPANIED BY AN APPROPRIATE GUARANTEE OF DELIVERY OF THE
CERTIFICATES AS SET FORTH IN THE ELECTION FORM FROM A FIRM WHICH IS A MEMBER OF
A REGISTERED NATIONAL SECURITIES EXCHANGE OR OF THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC., OR A COMMERCIAL BANK OR TRUST COMPANY HAVING AN
OFFICE OR CORRESPONDENT IN THE UNITED STATES, PROVIDED THE CERTIFICATES ARE IN
FACT DELIVERED TO THE EXCHANGE AGENT WITHIN THREE NASDAQ TRADING DAYS AFTER THE
DATE OF EXECUTION OF SUCH GUARANTEE OF DELIVERY).
Any holder of ROHN shares who has made a cash election by submitting an
Election Form to the Exchange Agent may revoke such cash election by written
notice received by the Exchange Agent prior to 5:00 p.m., New York City Time,
on Friday, March 19, 1999, the Election Date. In addition, all Election Forms
will be automatically revoked if the Exchange Agent is notified in writing by
ROHN and PiRod that the Merger has been abandoned. If an Election Form is
revoked, the certificate or certificates (or guarantees of delivery, as
appropriate) for the ROHN shares to which the Election Form relates will be
promptly returned to the ROHN stockholder who submitted them to the Exchange
Agent.
The determination of the Exchange Agent whether cash elections have been
properly made or revoked and when elections and revocations were received by it
will be binding. If no Election Form is received with respect to ROHN shares,
or if the Exchange Agent determines that any cash election was not properly
made with respect to any ROHN shares, such shares will be treated in the Merger
as shares retained by the ROHN stockholder. The Exchange Agent will also make
all computations as to the proration contemplated by the Merger Agreement and
any such computation will be conclusive and binding. The Exchange Agent may,
with the consent of ROHN and PiRod, make such rules as are consistent with the
Merger Agreement for the implementation of the elections contemplated by the
Merger Agreement and as are necessary or desirable to effect such elections.
Management of ROHN after the Merger; ROHN Stockholders Agreement
Following the Merger, ROHN will be the surviving corporation, and the Merger
Agreement provides that ROHN's officers and directors will continue after the
Merger until their terms expire or their successors are otherwise elected.
Under the ROHN Stockholders Agreement dated as of December 22, 1998, the
Trust, ROHN, certain stockholders of PiRod affiliated with Bain Capital, Inc.
owning approximately 55% of PiRod's equity (the "Bain Stockholders") and
certain other stockholders of PiRod (the "Other PiRod Stockholders"), the Board
of
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Directors of ROHN will be reconstituted at the Effective Time to consist of ten
directors, four designated by the Trust, two designated by the Bain
Stockholders, two directors unaffiliated with the Trust, the Bain Stockholders
or the Other PiRod Stockholders (selected jointly by the Trust and the Bain
Stockholders), and two members of management of ROHN (Brian Pemberton, ROHN's
chief executive officer and Myron Noble, the chief executive officer of PiRod's
subsidiary). In accordance with the ROHN Stockholders Agreement, the nominees
for election at the Meeting are:
John H. Laeri, Brian B.
Jr. Pemberton
Michael E. Levine Myron Noble
Gene Locks Paul M. Spinale
Darius W. Marc B. Wolpow
Gaskins, Jr. __________________
__________________
Messrs. Laeri, Levine, Locks and Gaskins are Trust designees and Messrs.
Spinale and Wolpow are Bain Stockholders designees. More extensive information
on these director nominees appears under "Nominees for Directors."
It is expected that Brian Pemberton will continue as ROHN's President and
Chief Executive Officer after the Merger, and that Myron Noble will serve as
the Chairman of ROHN's Board of Directors after the Merger. No other decisions
regarding the executive officers of ROHN after the Merger have been made.
The ROHN Stockholders Agreement provides, among other things, that
.the Board of Directors of ROHN will consist of ten persons and no action
shall be taken to classify the Board of Directors
.for so long as the Trust continues to own beneficially at least 20% of
ROHN's common stock, it will be entitled to four designees as directors,
three designees at between 20% and 15%, two designees between 15% and 10%,
and one designee between 10% and 5%. The Bain Stockholders will be
entitled to designate two directors for so long as they continue to own
beneficially at least 10% of ROHN's common stock, and one designee between
10% and 5%. Each of Messrs. Pemberton and Noble will be nominated as
directors after the Effective Time and for so long as they hold the
executive positions with ROHN held immediately after the Effective Time.
Two individuals not affiliated with the Trust, the Bain Stockholders or
the Other PiRod Stockholders (selected jointly by the Trust and the Bain
Stockholders) will constitute the rest of the directors of ROHN. The
agreements regarding the Board representation terminate at such time as
either the Trust or the Bain Stockholders beneficially owns less than 5%
of ROHN's common stock
.none of the Trust, the Bain Stockholders or the Other PiRod Stockholders
may transfer ROHN shares prior to the first anniversary of the Effective
Time without the consent of the Trust and the Bain Stockholders, with
certain limited exceptions
.if the Trust, the Bain Stockholders or the Other PiRod Stockholders
propose to sell or otherwise transfer more than 5% of ROHN's outstanding
common stock, the others will have "tag-along" rights to participate in
such a sale. Excluded from this provision are transfers to affiliates,
sales registered under the Securities Act of 1933, transfers under Rule
144 and transfers under the laws of descent and distribution
.certain demand and/or piggyback registration rights under the Securities
Act of 1933 are granted to each of the Trust, the Bain Stockholders and
the Other PiRod Stockholders, within certain limits. Such rights may be
assigned to a transferee of more than 5% of ROHN's outstanding shares
.so long as either of the Trust or the Bain Stockholders own at least 10%
of ROHN's shares, ROHN has agreed that it will not, without the prior
approval of such stockholder
.amend its by-laws in a way that diminishes the rights of any ROHN
stockholders
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.adopt a shareholder rights plan or "poison pill"
.enter into any agreement affording any party any right to vote for the
election of directors of ROHN
.enter into any agreement or other commitment affording any party other
than ROHN rights or remedies in the event of a change of control of ROHN
Director/Officer Liability Insurance and Indemnification
ROHN has covenanted that for a period of six years after the Effective Time
it will use its commercially reasonable best efforts to cause to be maintained
in effect its current directors and officers insurance and indemnification
policy or an equivalent policy or policies, and not to take any action that
would change or amend the provisions of any existing indemnification agreements
or the Certificate of Incorporation or bylaws of ROHN as the surviving
corporation relating to indemnification, advancement of expenses or limitation
of liability in any manner that would adversely affect the rights thereunder of
individuals who at or prior to the Effective Time were directors, officers,
employees, agents or other representatives of ROHN, PiRod or any of their
subsidiaries. See "Election of Directors--Employment Contracts and Other
Agreements--Indemnification Agreements."
Interests of Certain Persons in the Merger
In addition to the liability insurance and indemnification provisions
discussed above, another interest in the Merger is that of Bain Capital, Inc.,
which is affiliated with the Bain Stockholders. If the Merger and the Financing
are effected, Bain Capital, Inc. will receive total fees of $3.0 million from
ROHN as the corporation surviving the Merger. See also "--Management of ROHN
after the Merger; ROHN Stockholders Agreement" and "--Treatment of Options and
Warrants."
No Solicitation
Each of ROHN and PiRod has agreed in the Merger Agreement that it will not,
directly or indirectly, solicit, initiate or encourage any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, a Takeover Proposal (defined to mean any bona fide written proposal made by
a third party to acquire, directly or indirectly, more than 50% of the voting
power of the equity interests or the assets of ROHN or PiRod), or participate
in any discussions or negotiations regarding any Takeover Proposal. However, if
at any time prior to the Effective Time, the Board of Directors of ROHN or
PiRod determines in good faith, after consultation with its financial and legal
advisers, that a Takeover Proposal not solicited in violation of the foregoing
may reasonably be expected to result in a Superior Proposal, either may furnish
information with respect to itself and its subsidiaries to the third party
making that proposal, and participate in negotiations regarding that proposal.
A "Superior Proposal" is defined to mean a Takeover Proposal having terms which
the Board of Directors of ROHN or PiRod determines in its good faith judgment
(based, with respect to the consideration payable, on the opinion of a
financial adviser of nationally recognized reputation) to be more favorable to
its shareholders from a financial point of view (taking into account, among
other things, the type and amount of consideration to be received and risks of
non-consummation) than the Merger and to be reasonably capable of being
completed (and for which financing has been committed on customary terms).
Voting Agreements
The Trust, as an approximately 55.5% stockholder of ROHN, and the Bain
Stockholders, beneficial owners of approximately 55% of PiRod's outstanding
shares, have each entered into a voting agreement dated as of December 22, 1998
with PiRod and ROHN, respectively, agreeing to vote their shares in favor of
the Merger and approval and adoption of the Merger Agreement, to vote their
shares against any action or agreement that would result in a breach in any
material respect of any representation, warranty or covenant of ROHN or PiRod,
respectively, in the Merger Agreement and to vote their shares against any
action that would
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impede the Merger. Such obligations to vote shares are subject to there having
been no amendment to the Merger Agreement that is adverse to the respective
stockholders, and there not having been any action taken nor order promulgated
making the vote of the shares by the respective stockholders illegal or
prohibited, and, in the case of the Trust, bankruptcy court approval.
As security for their obligations to so vote, each stockholder party to a
voting agreement has granted an irrevocable proxy to ROHN or PiRod, as the case
may be, subject to the above conditions. The voting agreements and proxies
terminate on termination of the Merger Agreement, except that if the Merger
Agreement is terminated by ROHN or PiRod because of another Takeover Proposal,
the voting agreements of the stockholders of the terminating party will not
terminate until the 60th day following the date on which notice of such
Takeover Proposal is first provided to the non-terminating party. Each
stockholder has agreed to not solicit other parties with respect to a
transaction other than the Merger, provided that if any determines in good
faith, after consultation with its financial and legal advisors, that another
Takeover Proposal may reasonably be expected to result in a Superior Proposal,
it may participate in negotiations regarding such a proposal.
Certain Federal Income Tax Consequences
In the opinion of Bell, Boyd & Lloyd, counsel to ROHN, the following are,
under currently applicable law, the material United States federal income tax
considerations generally applicable to the Merger. The tax treatment described
herein may vary depending upon each stockholder's particular circumstances and
tax position. This discussion does not apply to the Trust, which is subject to
special rules. Certain other stockholders of ROHN or PiRod (including insurance
companies, tax-exempt organizations, financial institutions or broker-dealers,
foreign corporations, persons who are not citizens or residents of the United
States, stockholders who do not hold their shares as capital assets and
stockholders who have acquired their existing stock upon the exercise of
options or otherwise as compensation) may be subject to special rules not
discussed below. No ruling from the Internal Revenue Service ("IRS") will be
applied for with respect to the federal income tax consequences discussed
herein and, accordingly, there can be no assurance that the IRS will agree with
the conclusions stated herein. In addition, this discussion does not consider
the effect of any applicable foreign, state, local or other tax laws. Each
stockholder should consult his or her own tax advisor as to the particular tax
consequences to him or her of the Merger, including the applicability and
effect of any foreign, state, local or other tax laws, any recent changes in
applicable tax laws and any proposed legislation.
Characterization of the Merger and the Cash Election for U.S. Federal Income
Tax Purposes. For U.S. federal income tax purposes, the Merger of PiRod with
and into ROHN will be treated as a reorganization with respect to the PiRod
stockholders and warrantholders and as a stock redemption with respect to the
ROHN stockholders who tender shares of ROHN common stock and receive cash in
exchange. No gain or loss will be recognized to either ROHN or PiRod as a
result of the Merger.
ROHN Stockholders Receiving Cash. As described more fully below, the U.S.
federal income tax consequences of the Merger with respect to a particular ROHN
stockholder (other than the Trust) will depend upon, among other things, (i)
whether the stockholder receives any cash proceeds pursuant to the Merger, (ii)
the extent to which a stockholder is deemed to own ROHN shares not actually
owned by the stockholder and (iii) whether the redemption of a holder's ROHN
shares by ROHN will qualify as a sale or exchange under Section 302 of the
Internal Revenue Code of 1986, as amended (the "Code"). A ROHN stockholder will
recognize either capital gain or loss equal to the difference between the cash
proceeds from the redemption of such stockholder's ROHN shares by ROHN and the
stockholder's adjusted tax basis in the ROHN shares that are redeemed, to the
extent such redemption is treated as a sale or exchange under Section 302 of
the Code with respect to such stockholder. Such gain or loss generally will be
long-term capital gain or loss if the ROHN shares are held as a capital asset
by the stockholder for more than one year. Under Section 302 of the Code, a
redemption of ROHN shares pursuant to the Merger will, as a general rule, be
treated as a sale or exchange if
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such redemption (a) is "substantially disproportionate" with respect to the
stockholder, (b) results in a "complete redemption" of the stockholder's
interest in ROHN or (c) is "not essentially equivalent to a dividend" with
respect to the stockholder.
In determining whether any of these Section 302 tests is satisfied,
stockholders must take into account not only the Stock that they actually own,
but also any ROHN share they are deemed to own under the constructive ownership
rules set forth in Section 318 of the Code. Pursuant to these constructive
ownership rules, a stockholder is deemed to constructively own any ROHN share
that is owned by certain related individuals or entities and any ROHN share
that the stockholder has the right to acquire by exercise of an option or by
conversion or exchange of a security. ROHN stockholders should consult their
own tax advisors about the application of the constructive ownership rules to
their particular situation. In applying the tests of Section 302, stockholders
will also need to take into account the ROHN shares issued in the Merger to
PiRod stockholders.
The redemption of a stockholder's ROHN shares will be "substantially
disproportionate" with respect to such stockholder if the percentage of ROHN
shares actually and constructively owned by such stockholder immediately
following the Merger is less than 80% of the percentage of ROHN shares actually
and constructively owned by such stockholder immediately prior to the Merger.
Stockholders should consult their own tax advisors with respect to the
application of the "substantially disproportionate" test to their particular
facts and circumstances.
The redemption of a stockholder's ROHN shares will result in a "complete
redemption" of a stockholder's interest in ROHN if either (a) all the ROHN
shares actually and constructively owned by the stockholder are redeemed
pursuant to the Merger or (b) all the ROHN shares actually owned by the
stockholder are redeemed pursuant to the Merger and the stockholder is eligible
to waive, and does effectively waive in accordance with Section 302(c) of the
Code, attribution of all ROHN shares which otherwise would be considered to be
constructively owned by such stockholder.
Even if the redemption of a stockholder's ROHN shares fails to satisfy the
"substantially disproportionate" test or the "complete redemption" test
described above, the redemption of a stockholder's ROHN shares may nevertheless
satisfy the "not essentially equivalent to a dividend" test if the
stockholder's redemption of ROHN shares pursuant to the Merger results in a
"meaningful reduction" in such stockholder's proportionate interest in ROHN
shares. Whether the receipt of cash by a stockholder will be considered "not
essentially equivalent to a dividend" will depend upon such stockholder's facts
and circumstances. In certain circumstances, even a small reduction in a
stockholder's proportionate equity interest may satisfy this test. For example,
the IRS has indicated in a published ruling that a 3.3% reduction in the
proportionate equity interest of a small (substantially less than 1%)
stockholder in a publicly held corporation who exercises no control over
corporate affairs constitutes such a "meaningful reduction." Stockholders
should consult with their own tax advisors as to the application of this test
in their particular situation.
A tendering stockholder may not be able to satisfy one of the above three
tests because of contemporaneous acquisitions of ROHN shares (including
acquisitions pursuant to the Merger as a result of being a PiRod stockholder)
by such stockholder or a related party whose ROHN shares would be attributed to
such stockholder under Section 318 of the Code. Stockholders should consult
their own tax advisors regarding the tax consequences of such acquisitions in
their particular circumstances.
A redemption in the Merger from a ROHN stockholder who (i) is not also a
PiRod stockholder, (ii) is not treated as owning any ROHN shares under the
constructive ownership rules described above and (iii) elects to receive cash
for all of his ROHN shares, will be treated as "substantially disproportionate"
even if all of the ROHN shares outstanding before the Merger are tendered for
cash.
If a stockholder cannot satisfy any of the three tests described above and
to the extent ROHN has sufficient current and/or accumulated earnings and
profits, such stockholder will be treated as having received a dividend which
will be includible in gross income (and treated as ordinary income) in an
amount equal to the cash received (without regard to gain or loss, if any).
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In the case of a corporate stockholder, if the cash paid is treated as a
dividend, such dividend income may be eligible for the 70% dividends-received
deduction. The dividends-received deduction is subject to certain limitations,
and may not be available if the corporate stockholder does not satisfy certain
holding period requirements with respect to the ROHN shares or if the ROHN
shares are treated as "debt financed portfolio Stock" within the meaning of
Section 246A(c) of the Code. Additionally, if a dividends-received deduction is
available, the dividend may be treated as an "extraordinary dividend" under
Section 1059 of the Code, in which case a corporate stockholder's adjusted tax
basis in the ROHN shares retained by such stockholder would be reduced, but not
below zero, by the amount of the nontaxed portion of such dividend. Any amount
of the nontaxed portion of the dividend in excess of the corporate
stockholder's adjusted tax basis generally will be treated as gain from the
sale or exchange of such ROHN shares. Corporate stockholders are urged to
consult their own tax advisors as to the effect of Section 1059 of the Code on
their receipt of cash.
ROHN Stockholders Retaining Shares and Receiving No Cash. The Merger will
have no U.S. federal income tax consequences for ROHN stockholders who retain
their ROHN shares and receive no cash. Accordingly, a stockholder will not
recognize any gain or loss on any Stock retained by such stockholder.
ROHN Stockholders Retaining a Portion of Their Shares and Receiving Cash. To
the extent that a ROHN stockholder elects to retain a portion of his or her
ROHN shares and exchange a portion of his or her ROHN shares for cash, or to
the extent a stockholder is prorated into receiving cash in exchange for some
portion of his or her ROHN shares, the tax treatment of the stockholder's
receipt of such cash will be the same as set forth above under "--ROHN
Stockholders Receiving Cash." In particular, as described more fully above
under "--ROHN Stockholders Receiving Cash," a stockholder's retention of ROHN
shares may, under certain circumstances, cause the cash received by such
stockholder pursuant to the Merger to be treated as a dividend for U.S. federal
income tax purposes.
Foreign ROHN Stockholders--Withholding. Foreign stockholders of ROHN should
consult their own tax advisors regarding the application to them of U.S.
withholding rules. For this purpose, a foreign stockholder is any person who
is, for U.S. federal income tax purposes, a foreign corporation, a non-resident
alien individual, a foreign partnership or a foreign estate or trust.
PiRod Stockholders and Warrantholders. The Merger will be treated as a
"reorganization" within the meaning of Section 368(a) of the Code with respect
to the PiRod stockholders. As a result, no gain or loss will be recognized to
ROHN, PiRod or the PiRod stockholders on the consummation of the Merger, the
receipt by PiRod stockholders of ROHN shares in exchange for PiRod stock or the
receipt by PiRod warrantholders of ROHN warrants in exchange for their PiRod
warrants. The basis and holding period of ROHN shares in the hands of the PiRod
stockholders will be the same as the basis and holding period of the PiRod
shares exchanged therefor and the basis and holding period of ROHN warrants in
the hands of the PiRod warrantholders will be the same as the basis and holding
period of the PiRod warrants exchanged therefor. Gain or loss will be
recognized to a PiRod stockholder to the extent of any cash received in lieu of
fractional shares.
Information Reporting and Backup Withholding. ROHN must report annually to
the IRS and to each stockholder the amount of dividends paid to such
stockholder and the backup withholding tax, if any, withheld with respect to
such dividends. Copies of these information returns also may be made available
to the tax authorities in the country in which a foreign stockholder resides
under the provisions of an applicable income tax treaty. Backup withholding
generally is imposed at the rate of 31% on certain payments to persons that
fail to furnish certain information under the United States information
reporting requirements.
THOUGH THE FOREGOING ARE THE MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
GENERALLY APPLICABLE TO THE MERGER, THE DISCUSSION DOES NOT ADDRESS EVERY
FEDERAL INCOME TAX CONCERN WHICH MAY BE APPLICABLE TO A PARTICULAR STOCKHOLDER.
EACH STOCKHOLDER IS URGED TO CONSULT SUCH
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STOCKHOLDER'S OWN TAX ADVISOR TO DETERMINE THE FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES TO SUCH STOCKHOLDER, IN THE LIGHT OF ITS PARTICULAR CIRCUMSTANCES,
OF THE DISPOSITION OF ROHN SHARES PURSUANT TO THE MERGER.
Appraisal Rights
ROHN stockholders are not entitled to appraisal rights in connection with
the Merger. PiRod stockholders would be so entitled, but an agreement among
PiRod stockholders contains provisions which require all PiRod stockholders to
waive such rights if the Bain Stockholders agree to the transfer of their PiRod
shares in connection with the Merger.
Accounting Treatment
The Merger will be treated as a "purchase" for financial reporting and
accounting purposes, in accordance with generally accepted accounting
principles. After the Merger, the results of operations of PiRod will be
included in the consolidated financial statements of ROHN. The value of the
ROHN shares issued in the acquisition of PiRod will be allocated based on the
fair value of the assets acquired and the liabilities assumed. Any excess of
cost over fair value of the net tangible assets of PiRod will be recorded as
goodwill and other intangible assets. Such allocations will be made based upon
valuations and other studies that have not yet been finalized.
Conditions for Merger and Other Provisions
The Merger Agreement contains a number of representations and warranties by
each of the parties and terms, covenants and conditions to be complied with and
performed by each of them on or before the Effective Time.
The obligations of ROHN and PiRod under the Merger Agreement are subject to
the fulfillment or waiver of the following conditions:
. the stockholders of both parties shall have approved the transactions
contemplated by the Merger Agreement
. there shall not have been any action threatened or taken, or any statute,
rule, regulation, judgment, order or injunction promulgated, enacted,
entered or enforced, by any governmental entity, that could reasonably be
expected to
. make the consummation of the Merger illegal or otherwise prohibited, or
. prohibit or impose any material limitation on ROHN's ownership or
operation of any material portion of the assets or businesses of ROHN
or PiRod
. any waiting period (and any extension thereof) under the HSR Act
applicable to the Merger shall have expired or been terminated
. the sale pursuant to the Merger Agreement of the ROHN shares beneficially
owned by the Trust shall have been approved by the Bankruptcy Court
. the Financing shall have been consummated, and
. the Securities and Exchange Commission (the "SEC") shall have declared
the registration statement of which this document is a part effective,
and no stop order or similar restraining order shall have been entered by
the SEC.
ROHN's obligation to consummate the Merger are further subject to:
. the accuracy of the representations and warranties of PiRod contained in
the Merger Agreement
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. the performance by PiRod of the obligations required to be performed by
it under the Merger Agreement
. there not having been a PiRod Material Adverse Effect (defined below)
. neither of the fairness opinions of DLJ to ROHN and the Trust dated the
date of the Merger Agreement shall have been withdrawn
. ROHN shall have received an opinion of counsel to the effect that the
Merger will be a reorganization within the meaning Section 368(a) of the
Code and that no gain or loss will be recognized to either ROHN or PiRod
for federal income tax purposes as a result of the Merger
. a solvency opinion to ROHN shall be confirmed at the Closing
. a management and advisory agreement between PiRod and Bain Capital
Partners V, L.P., shall have been terminated
. each holder of PiRod class L Warrants shall have agreed to the treatment
of such Warrants as provided in the Merger Agreement, and
. if cash available for distribution to ROHN's stockholders at the
Effective Time is less than $105 million, ROHN and the Trust shall each
have received a fairness opinion as of the Effective Time from DLJ to the
effect that the consideration to be received and/or retained by the
holders of ROHN shares (and, in case of the Trust, the Trust) pursuant to
the Merger Agreement is fair to such holders (and if applicable, the
Trust) from a financial point of view.
The obligation of PiRod to consummate the Merger is subject to corollary
conditions to the first three bulleted items above, plus receipt by PiRod from
its counsel of an opinion to the effect that the Merger will be a
reorganization within the meaning of Section 368(a) of the Code and that no
gain or loss will be recognized to a PiRod stockholder who exchanges his PiRod
shares for ROHN shares in the Merger, except to the extent of any cash received
with respect to fractional shares.
A "ROHN Material Adverse Effect" and a "PiRod Material Adverse Effect" are
defined to include any change in or effect on the business of the relevant
party or its subsidiaries that is materially adverse to the business, assets,
results of operations or financial condition of the relevant party and its
subsidiaries, taken as a whole, or which materially impairs the ability of the
relevant party to consummate the Merger or the other transactions contemplated
by the Merger Agreement, but exclude the impact of:
. changes in generally accepted accounting principles
. the public announcement of the Merger and compliance with the provisions
of the Merger Agreement
. any changes resulting from any restructuring or other similar charges or
write-offs taken by one party with the consent of the other
. the termination or failure to be consummated or completed of any
acquisition, joint venture, development project or other transaction
which was not consummated or completed prior to the execution and
delivery of the Merger Agreement, and
. any change in general economic conditions, in interest rates or in
conditions affecting the telecommunications industry generally.
Termination; Termination Fee
The Merger Agreement may be terminated and the Merger may be abandoned at
any time before the Effective Time, either before or after approval by
stockholders of ROHN and PiRod:
. by mutual agreement of the boards of directors of ROHN and PiRod
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. by ROHN or PiRod if any final and non-appealable order, decree or ruling
of any court or governmental authority having appropriate jurisdiction
shall have been entered restraining, enjoining or otherwise prohibiting
the Merger
. by ROHN or PiRod if its board of directors determines that a Takeover
Proposal constitutes a Superior Proposal, provided that the party
terminating the Merger Agreement shall have paid a cash termination fee
equal to
. $5.5 million if ROHN is the terminating party or
. $2 million if PiRod is the terminating party, and
. by ROHN or PiRod if the Merger shall not have been consummated on or
before the later of (i) May 15, 1999 or (ii) 45 days after the SEC has
completed its review of this Proxy Statement/Prospectus (but in no event
later than July 15, 1999), provided that the right to terminate under
this provision shall not be available to any party whose failure to
perform any of its obligations under the Merger Agreement results in the
failure to consummate the Merger by such time.
Expenses
All costs and expenses incurred in connection with the Merger will be paid
by ROHN as the surviving corporation if the Merger is consummated. If the
Merger is not consummated, each party will pay its own costs and expenses
incurred by it, provided that ROHN will bear 76% (but in no event more than
$100,000) and PiRod will bear 24% of the costs incurred by PiRod to secure the
Financing, and provided further that ROHN shall not be obligated to pay its
share of such financing costs if ROHN is obligated to pay a termination fee as
described under "--Termination; Termination Fee."
Treatment of Options and Warrants
Options. Upon consummation of the Merger, each outstanding option issued
under PiRod's 1997 Stock Option Plan (a "PiRod Option") shall be converted into
an option (a "ROHN Exchange Option") to purchase the number of shares of ROHN
common stock equal to 3.7282 times the number of PiRod shares subject to the
PiRod Option, and with other terms and conditions that are the same as the
terms and conditions of such PiRod Option, immediately prior to the Effective
Time. The exercise price to purchase each ROHN share under a ROHN Exchange
Option will be adjusted so that the aggregate exercise price of all ROHN shares
issuable under such ROHN Exchange Option is equal to the aggregate price of all
PiRod shares issuable under the PiRod Option so converted. The Merger shall
have no effect on outstanding options granted under any stock option plan of
ROHN.
Warrants. The outstanding warrant to purchase PiRod class L common stock
issued to Jackson National Life Insurance Company (the "Jackson Warrant") shall
be converted into an immediately exercisable warrant to purchase the number of
shares of ROHN common stock equal to 61.6859 times the number of shares of
class L PiRod common stock purchasable under the Jackson Warrant immediately
before the Effective Time, and with other terms and conditions of such warrant
immediately before the Effective Time. Each outstanding warrant to purchase
PiRod class L common stock, other than the Jackson Warrant, shall be converted
into an immediately exercisable warrant to purchase the number of shares of
ROHN common stock equal to 46.5854 times the number of shares of class L PiRod
common stock purchasable under the warrant immediately before the Effective
Time, and with other terms and conditions of such warrant immediately before
the Effective Time. The outstanding warrant to purchase PiRod class A-7 shares
shall be converted into an immediately exercisable warrant to purchase the
number of shares of ROHN common stock equal to 3.7282 times the number of class
A-7 PiRod shares purchasable under the warrant immediately before the Effective
Time, and with other terms and conditions of such warrant immediately before
the Effective Time. In each case, the exercise price to purchase each share of
ROHN common stock under a ROHN warrant issued in the conversion will be
adjusted so that the aggregate exercise price of all ROHN shares purchasable
under such ROHN warrant is equal to the aggregate price of all PiRod shares
purchasable under the PiRod warrant so converted.
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Antitrust
Pursuant to the HSR Act and the rules promulgated thereunder, on December
24,1998 ROHN and PiRod furnished notification of the Merger and provided
certain information to the FTC and Department of Justice. The waiting period
under the HSR Act terminated on January 23, 1999.
At any time before or after the Effective Time, the FTC, the Department of
Justice or a private person or entity could seek under the antitrust laws,
among other things, to enjoin the Merger or to cause ROHN to divest itself, in
whole or in part, of PiRod or of other businesses conducted by ROHN. There can
be no assurance that a challenge to the Merger will not be made or that, if
such a challenge is made, ROHN and PiRod will prevail. The obligations of PiRod
and ROHN to consummate the Merger are subject to the condition that there be no
preliminary or permanent injunction or other order of any court or governmental
or regulatory authority prohibiting consummation of the Merger. Each party has
agreed to use its commercially reasonable best efforts to remove any such
prohibition.
BUSINESS OF ROHN
General
ROHN is a leading manufacturer of infrastructure products used in the
wireless communications industry. ROHN's principal products are towers,
equipment enclosures/shelters, poles, masts, mounts, and cabinets. ROHN's
growth in recent years has been due in part to the growth of the cellular phone
and other types of wireless communications systems, and the introduction and
growth of its equipment enclosure product line. ROHN began to experience the
strong favorable impact of the build-out of a new wireless communication system
in the United States, the Personal Communications System ("PCS"), in the second
half of 1996 and the first half of 1997; however, the buildout of PCS systems
has slowed considerably since the last half of 1997. ROHN believes it should
benefit from the eventual build-out of existing cellular and new PCS systems as
well as other wireless systems such as Enhanced Specialized Mobile Radio
("ESMR") and wireless local loop.
ROHN's product line is used by the cellular, PCS, ESMR, paging, radio and
television, wireless cable, private microwave and other telecommunications
businesses. Its key products consist of self-supporting and guyed (cable-
supported) towers, equipment enclosures, steel and concrete poles, concrete and
fiberglass equipment shelters, equipment cabinets, antenna mounts and
installation services. ROHN also manufactures galvanized steel agriculture
products, including horse stalls, cattle equipment, fencing and gates.
ROHN is a Delaware corporation which changed its name from UNR Industries,
Inc. in December 1997. ROHN was organized in 1979 as a holding company and is
now an operating company. During 1996, ROHN completed the sale of four of its
five operating divisions. In March 1997, ROHN moved its principal executive
offices from Chicago, Illinois to Peoria, Illinois. ROHN maintains its
executive offices and tower manufacturing facility at 6718 West Plank Road,
Peoria, IL 61604.
In 1982, ROHN filed a voluntarily petition for reorganization under Chapter
11 of the Federal Bankruptcy Code, and, pursuant to a Plan of Reorganization
confirmed by the Bankruptcy Court in 1989 and accepted by ROHN's creditors and
stockholders, 42,404,847 shares of common stock of ROHN were issued to the UNR
Asbestos-Disease Claims Trust and unsecured creditors in full discharge of all
claims. The Trust currently owns 29,348,051 shares of common stock of ROHN, or
approximately 55.5% of the shares currently outstanding.
Telecommunications Equipment Market
The use of wireless telephones in the United States has shown rapid growth
in recent years, from about five million subscribers in 1990 to over 60 million
today. The number of cell sites has risen from about 6,000 in 1990 to over
55,000 today and is expected to grow to as many as 100,000 by the end of 2002.
While co-located and rooftop cells sites will provide as many as 50% of these
sites, the remainder will require a tower or pole and equipment enclosure. Co-
located and rooftop sites will require mounts and equipment enclosures.
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Competition among wireless carriers is becoming increasingly intense,
lowering the average cost per minute for a wireless call to the range where it
can be an economic alternative to a wireline phone. This economic advantage
may serve to further enhance the growth of wireless subscribers. In addition,
other new technologies such as broadband wireless provide opportunities to
serve the rapid growth of internet services by providing "last mile" links
from fiber-optic hubs to office buildings. New technologies are continually
being introduced to use available wireless spectrum as an economic alternative
to traditional copper wire. These new technologies often require the use of
towers, poles, mounts and equipment enclosures manufactured by ROHN.
Broadcast is another market served by ROHN. Recent changes in FCC
regulation and the introduction of high definition television should provide
additional opportunities for ROHN, as new antenna support structures may be
required to support these new broadcasting technologies.
ROHN also plans to continue to develop overseas markets through its United
States customers and through the establishment of joint ventures, partnerships
and facilities in key developing countries. See "International."
Products
Towers. ROHN manufactures many configurations of towers, from one that
reaches 1,500 feet in the air to a small antenna mount. Its principal tower
product is the tubular self-supporting tower ranging in heights to 900 feet.
ROHN towers are used across the world for television broadcast, AM/FM radio
broadcast, microwave, cellular telephone, PCS, radar, surveillance camera
mounts, solar power stations and weather stations. Included within the towers
class of products are steel and concrete poles, generally used when there is
not enough space to erect a tower, such as an urban area where space is
limited. Approximately 53%, 50%, 56% and 57% of ROHN's revenues were
attributable to sales of towers and poles for the nine months ended September
30, 1998 and for years 1997, 1996 and 1995, respectively.
Enclosures. The proper housing of highly valuable electronic components and
power systems is a major concern for communications companies. ROHN's concrete
enclosures are made of lightweight concrete with steel reinforcements for
added strength. ROHN's fiberglass enclosures are made of laminated fiberglass
and are lightweight, portable, strong and secure. ROHN has recently developed
a non-combustible enclosure for roof top applications, manufactured with a
steel frame to meet strict fire codes. Equipment cabinets, made of lightweight
concrete or molded fiberglass for water and rust resistance, are designed as
maintenance free structures for compact equipment installations. The
enclosures class of products accounted for approximately 37%, 32%, 25%, and
29% of ROHN's revenues for the nine months ended September 30, 1998 and for
years 1997, 1996 and 1995, respectively. Concrete structures represent the
largest part of ROHN's enclosures business, generating approximately 75% of
enclosures revenues for the nine months ended September 30, 1998 and for years
1997, 1996 and 1995.
Distributor Products. ROHN's distributor products line includes antenna
mounts that are hot-dipped galvanized to prevent corrosion. They range from
non-penetrating roof mounts that spread the balanced weight over a large area
to mounts that concentrate weight for compact installation. ROHN also provides
tower mounts, wall mounts for corners or flat walls, square pole mounts, and
standard roof mounts for flat or sloped roofs. ROHN also manufactures
galvanized steel agriculture products, including horse stalls, cattle
equipment, fencing and gates, and privacy fencing products. Distributor
products accounted for approximately 10%, 18%, 19% and 14% of ROHN's revenues
for the nine months ended September 30, 1998, and for years 1997, 1996 and
1995, respectively.
Patents and Trademarks
ROHN has a number of patents and trademarks, none of which are considered
material to its operations.
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International
Foreign sales accounted for approximately $10.5 million, $10.2 million, $8.0
million and $8.3 million of ROHN's revenues in the nine months ended September
30, 1998 and in years 1997, 1996 and 1995, respectively. ROHN has sold towers
and other equipment in more than 55 countries and currently operates a sales
office in Mexico City. In December 1997, ROHN and BrasilSat Herald S.A. of
Curitiba, Brazil finalized an agreement to form a joint venture to serve the
growing telecommunications infrastructure industry in Brazil and South America.
The joint venture began production of enclosures in 1998 and is expanding its
manufacturing facilities to produce towers and poles and to provide galvanizing
capabilities, with a target for completion in 2000. The joint venture's
operations have been adversely affected by the Brazilian economy in 1998 and
early 1999 and by an inability to recruit talented management personnel. ROHN
plans to develop overseas markets through its United States customers, who are
investing in telecommunications on a global basis, and through the
establishment of partnerships and facilities in key developing countries.
Customers and Backlog
ROHN markets its products worldwide, through a variety of marketing channels
with different customer focuses. Domestically, ROHN has 10 direct salespeople
with the primary sales responsibility for towers, enclosures and poles. ROHN
also has two salespeople who concentrate on distributor products.
For international sales efforts, ROHN employs two salespeople who
concentrate on Mexico and Latin America. In addition, ROHN utilizes two key
distributors and a variety of agents to cover the remainder of the world.
ROHN's backlog of firm orders was approximately $38.0 million, $52.4
million, $53.0 million and $26.9 million at September 30, 1998, December 31,
1997, 1996 and 1995, respectively. In 1997, no one customer accounted for more
that 10% of ROHN's net sales.
Competition
The telecommunications infrastructure industry is highly competitive. ROHN
faces substantial competition in each of the segments it serves from
established competitors, some of which have greater financial, engineering,
manufacturing, and marketing resources than ROHN. ROHN's competitors in each
product area can be expected to continue to improve the design of their
products, to introduce new products with competitive prices and performance
characteristics and to improve customer service. Competitive pressures have
caused an erosion in operating margins in 1998, and there can be no assurance
that competitive pressures will not necessitate further price reductions,
adversely affecting operating results in the future. Although ROHN believes
that it has certain advantages over its competitors, maintaining such
advantages will require a continued high level of investment by ROHN in sales,
marketing and other services. There can be no assurance that ROHN will have
sufficient resources to continue to make other such investments or that ROHN
will be able to maintain the competitive advantages it currently enjoys.
Raw Materials
The primary raw materials used by ROHN to produce its products are steel,
zinc and concrete. All materials are currently readily available in the
marketplace. ROHN is not dependent upon any single supplier for any materials
essential to its business or not otherwise commercially available. ROHN has
been able to obtain an adequate supply of raw materials and no shortage of raw
materials is currently anticipated. ROHN's ability to continue to acquire
steel, zinc and concrete on favorable terms may be adversely affected by
factors beyond its control. Because steel, zinc and concrete constitute a
significant portion of ROHN's cost of goods sold, any increase in price of such
materials could have a material adverse impact on ROHN's gross profit margin.
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Employees
As of September 30, 1998, ROHN employed 810 people. Collective bargaining
agreements cover 386 employees at its facilities in Peoria and Frankfort. The
unions are the United Automobile, Aerospace and Agricultural Implement Workers
of America (UAW) in Peoria and the Retail, Wholesale and Department Store Union
(RWDSU) in Frankfort. ROHN considers its relations with its employees to be
good.
ROHN's success depends to a significant degree upon the continued
contributions of key management, engineering, sales, marketing, customer
support, finance and manufacturing personnel, certain of whom would be
difficult to replace. The loss of the services of certain of these personnel
could have a material adverse effect on ROHN. There can be no assurance that
the services of such personnel will continue to be available to ROHN. In
addition, ROHN believes that its success depends on its ability to attract and
retain additional qualified employees and that the failure to recruit such
other skilled personnel could have a material adverse effect on ROHN.
Environmental Matters
ROHN employs some materials in its manufacturing processes, including oils
and solvents that may be regulated by environmental laws. ROHN has made
expenditures to comply with environmental laws and regulations, including
investigation and remediation of ground and water contamination, and expects to
make such expenditures in the future to comply with existing and probable
requirements. While such expenditures to date have not materially affected
ROHN's capital expenditures, competitive position, financial condition or
results of operations, there can be no assurance that more stringent
regulations or enforcement in the future will not have such effects.
In some cases, ROHN has notified state or federal authorities of a possible
need to remedy sites it previously operated. ROHN has also been notified by
various state and federal governmental authorities that they believe it may be
a "potentially responsible party" or otherwise have responsibility with respect
to clean-up obligations at certain hazardous and other waste disposal sites
which were not owned or operated by ROHN. In some such cases, ROHN has effected
settlements with the relevant authorities or other parties for immaterial
amounts. In other cases, ROHN is participating in negotiations for settlement
with the relevant authorities or other parties or has notified the authorities
that it denies liability for clean-up obligations. At all such sites, costs
which may be incurred are difficult to accurately predict until the level of
contamination is determined. ROHN, after consultation with legal counsel and
environmental experts, believes that the ultimate outcome with respect to all
of these sites will not have a material effect on ROHN's financial condition or
on its results of operations.
Properties
ROHN has 847,000 square feet of manufacturing facilities located in Peoria,
Illinois, Bessemer, Alabama and Frankfort, Indiana. ROHN's headquarters are
located in Peoria, Illinois. At this location, ROHN manufactures towers and
steel poles and performs all of its in-house hot-dip galvanizing processes.
ROHN's modern manufacturing plant in Bessemer, Alabama is devoted entirely to
the production of equipment enclosures/shelters and cabinets.
Installation of a new, $5.3 million galvanizing facility, including a 51-
foot galvanizing kettle, was completed at Peoria in August, 1997. The facility
began full operation in the third quarter of 1997.
DESCRIPTION OF ROHN CAPITAL STOCK
The authorized capital stock of ROHN consists of 60,000,000 shares of common
stock, $.01 par value per share.
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Holders of ROHN common stock are entitled to receive distributions as may be
declared by the ROHN Board of Directors. In any liquidation, each outstanding
share of ROHN common stock will entitle its holder to share (based on the
percentage of shares then held) in the assets of ROHN that remain after payment
of all liabilities.
Holders of common stock of ROHN are entitled one vote for each share on all
matters submitted to a stockholder vote. Stockholders do not have cumulative
voting in the election of directors. This means that holders of a majority of
the common stock of ROHN can elect all of the directors standing for election
and the holders of the remaining common stock could not elect any director.
Common stock holders have no conversion, sinking fund, redemption or
preemptive rights. All outstanding shares of common stock of ROHN are, and the
shares of ROHN common stock to be issued to PiRod stockholders will be, when
issued, fully paid and unassessable.
ROHN furnishes stockholders with annual reports containing audited
consolidated financial statements, which contain an opinion of ROHN's
independent accounts. ROHN also furnishes stockholders with quarterly reports
for the first three quarters of each year, which contain unaudited financial
information.
The ROHN common stock is quoted on the Nasdaq National Market. The transfer
agent and registrar for ROHN common stock is First Chicago Trust Company of New
York, P.O. Box 2500, Jersey City, NJ 07303.
The DGCL generally prohibits ROHN from merging with an "interested
stockholder" (a holder of 15% or more of ROHN's common stock) for three years.
The DGCL also generally prohibits ROHN from selling 10% or more of its assets
to an interested stockholder. ROHN can enter into these transactions, however,
if the Board of Directors approves the proposed transaction before the
stockholder becomes an interested stockholder or if the Board of Directors and
the holders of at least 66 2/3% of voting shares (excluding shares owned by the
interested stockholder) approve the transaction.
See "The Merger--Management of ROHN after the Merger; ROHN Stockholders
Agreement" for a description for certain voting agreements between the Trust
and the PiRod Stockholders effective with the Merger, and for certain
limitations on transactions that ROHN may enter into only with the consent of
the Trust and the PiRod Stockholders.
PIROD COMMON STOCK
There is no established public trading market for any class of PiRod's
common stock. There are seven holders of outstanding PiRod class A common stock
and five holders of outstanding PiRod class L common stock. After the Merger,
the Bain Stockholders will hold 4,206,469 ROHN shares and PH, Inc. (formerly
PiRod, Inc. and also referred to in this Proxy Statement/Prospectus as the
Predecessor), the beneficial owner of 45% of outstanding PiRod common stock,
will hold 3,441,637 ROHN shares. Myron Noble will indirectly beneficially own
approximately 1,179,000 ROHN shares through his direct ownership interest in
PH, Inc. Kenneth Blessing will have an indirect beneficial ownership of
approximately 857,000 ROHN shares through his direct ownership in PH, Inc. No
dividends have been declared with respect to any class of PiRod common stock.
Under PiRod's current financing arrangements, the payment of dividends with
respect to its common stock is restricted; however, these financing
arrangements will be terminated in connection with the Merger.
BUSINESS OF PIROD
General
PiRod Holdings, Inc. is a holding company incorporated in Delaware which
owns 100% of the equity securities of PiRod Inc., a Delaware corporation. (The
term "PiRod" as used in this section and elsewhere herein includes PiRod
Holdings, Inc. and its subsidiary, unless the context indicates otherwise.)
PiRod is a
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manufacturer of custom engineered infrastructure products used in the wireless
communications market. The products manufactured by PiRod include self-
supporting towers, guyed (cable-supported) towers, monopoles, tower parts and
accessories which are used in many wireless communications applications,
including cellular, PCS, ESMR, paging, broadcast radio and television and
microwave. PiRod also provides engineering and installation services to its
customers, has a strong reputation for customer service and is a technological
leader in the industry. PiRod believes it has a competitive advantage over
other companies in the industry due to, among other factors, its development of
a proprietary management information system that enables PiRod's sales force to
provide customers with same-day quotations for custom-designed towers and
monopoles. Additionally, PiRod has a diversified customer base and has
developed strong long-term customer relationships.
PiRod was incorporated on July 24, 1996 shortly before it acquired, through
its subsidiary, substantially all of the assets and liabilities of PiRod, Inc.,
an Indiana corporation (the "Predecessor"). The Predecessor was founded in 1950
as PiRod T.V. Sales and Service and began manufacturing towers in order to
generate sales of televisions.
Products and Services
Self-Supporting Towers. PiRod designs, engineers and manufactures self-
supporting towers ranging from 10 feet to 580 feet in height. Self-supporting
towers utilize angle bracing and are manufactured from solid steel rod. PiRod
designs its self-supporting towers using a unique truss-style leg design which
permits climbing on all three legs of the tower. Due to the strength of the
design, less bracing of the tower legs is required and maintenance access and
tower safety are improved. Revenues from sales of self-supporting towers
composed approximately 39%, 42%, 38% and 41% of PiRod's total revenues for the
nine months ended September 27, 1998 and for fiscal years 1997, 1996 and 1995,
respectively.
Guyed Towers. PiRod designs, engineers and manufactures guyed towers
(including all hardware, mounts and brackets) ranging in face-widths from 12 to
90 inches and ranging in height from 10 to 1500 feet. The legs of the guyed
towers are manufactured from solid steel rod. Revenues from sales of guyed
towers composed approximately 21%, 19%, 17% and 20% of PiRod's total revenues
for the nine months ended September 27, 1998 and for fiscal years 1997, 1996
and 1995, respectively.
Monopoles. PiRod designs, engineers and manufactures stepped monopoles and
also resells tapered monopoles manufactured by certified suppliers. PiRod's
monopoles are custom-sized up to 200 feet in height with sections ranging from
12 to 60 inches in diameter and up to 40 feet in length. The monopoles are
modularly constructed so that all sections are interchangeable. Additionally,
PiRod's monopoles utilize patented internal flange joints which ensure positive
alignment for secure, precise installation. PiRod's monopoles are adaptable to
any cellular configuration when combined with rotatable platforms and other
mounts. PiRod was the first company in the industry to develop rotatable
platforms which facilitate exact antenna alignment. Revenues from sales of
monopoles composed approximately 12%, 15%, 23% and 14% of PiRod's total
revenues for the nine months ended September 27, 1998 and for fiscal years
1997, 1996 and 1995, respectively.
Parts and Accessories. PiRod manufactures, markets and sells a broad variety
of tower and monopole parts and accessories, including antenna mounts, guy
components, anchor steel, grounding products, lighting products, transmission
line bridge products, transmission line hanging brackets, maintenance and
safety equipment and engineered components. These parts and accessories are
compatible with PiRod's own products and many products manufactured by its
competitors, including ROHN. Revenues from sales of parts and accessories
composed approximately 18%, 15%, 12% and 12% of PiRod's total revenues for the
nine months ended September 27, 1998 and for fiscal years 1997, 1996 and 1995,
respectively.
Engineering, Installation and Delivery Services. PiRod's 12 engineers
develop plans to create custom-designed towers addressing each customer's
unique site conditions and needs. The engineers utilize PiRod's proprietary
management information system to quickly create custom drawings depicting the
tower and tower foundation, together with a bill of materials and price quote.
PiRod also maintains an extensive database which
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includes customer and technical data on over 10,000 towers and monopoles
designed and manufactured by PiRod. The database allows PiRod's engineers to
duplicate previous structures or to easily re-analyze an existing tower. Upon
request, PiRod provides its customers with complete tower erection and
installation services. For these customers, PiRod coordinates the tower
erection crew or supervises installation using a private installation company.
PiRod is unique in the industry in that it uses its own trucks to deliver its
towers to each customer's site. Revenues from engineering, installation and
delivery services composed approximately 11%, 10%, 11% and 14% of PiRod's total
revenues for the nine months ended September 27, 1998 and for fiscal years
1997, 1996 and 1995, respectively.
Customers and Backlog
PiRod markets its products worldwide utilizing a sales force of 14 people.
PiRod's backlog of firm orders was approximately $14 million as of September
27, 1998, and $11 million as of September 27, 1997. As of September 27, 1998,
eight of PiRod's customers accounted for 56% of its 1998 sales and only one of
its customers, Crown Castle International Corp., accounted for more than 10% of
its sales in 1998.
Suppliers
PiRod purchases galvanizing services, welding supplies, electrical equipment
and plate, round, pipe and angle steel from various suppliers. PiRod has a
long-term contract with The Witt Company for the provision of its galvanizing
services. For all of its other supply needs, PiRod annually renegotiates new
supply contracts. For the nine months ended September 27, 1998, eight suppliers
accounted for approximately 50% of PiRod's total production material purchases,
with The Witt Company accounting for 19% of the total.
Property and Employees
PiRod's headquarters and facilities are located on approximately 20 acres in
Plymouth, Indiana. PiRod has a total of 188,000 square feet of manufacturing
and office space, including the main manufacturing facility which is
approximately 70,400 square feet. PiRod employs a total of approximately 220
employees, none of whom are members of any union arrangement.
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PIROD MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations should be read in conjunction with the audited and unaudited
financial statements, including notes thereto, of PiRod and the Predecessor
included elsewhere in this Proxy Statement/Prospectus.
Overview
As more fully described in "Business of PiRod," PiRod is a leading
manufacturer of towers and accessory parts used primarily for infrastructure
products in the wireless communications industry. This includes cellular, PCS,
microwave, radio, and television applications. PiRod also provides engineering,
installation, and delivery services to customers in the wireless communications
markets.
PiRod Holdings, Inc. was incorporated on July 24, 1996 and had no
substantive operations for the period July 24, 1996 through August 27, 1996. On
August 28, 1996, PiRod acquired, through its wholly-owned subsidiary PiROD
Acquisition, Inc., substantially all of the operating assets and liabilities of
the Predecessor in a purchase transaction (the "Acquisition"). Subsequent to
the Acquisition, the Predecessor changed its name to PH, Inc. and PiROD
Acquisition, Inc. changed its name to PiROD Inc.
On December 22, 1998, PiRod Holdings, Inc. entered into an agreement and
plan of merger with ROHN. In connection with this agreement, PiRod Holdings,
Inc. will be merged with and into ROHN with ROHN continuing as the surviving
corporation of the merger. The outstanding capital stock of PiRod Holdings,
Inc. will be converted into a total of approximately 7.65 million shares of
ROHN common stock.
Results of Operations
The following table sets forth PiRod's and the Predecessor's results of
operations expressed as a percentage of net sales for the periods indicated.
<TABLE>
<CAPTION>
PiRod and
Predecessor
Predecessor Combined PiRod
----------- ----------- ----------------------------
Nine Nine
Year Months Months
Year Ended Year Ended Ended Ended Ended
December December December September September
31, 1995 29, 1996 28, 1997 28, 1997 27, 1998
----------- ----------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Sales................. 100.0% 100.0% 100.0% 100.0% 100.0 %
Cost of Sales............. 69.2% 72.8% 67.5% 68.7% 72.2 %
----- ----- ----- ----- -----
Gross Profit.............. 30.8% 27.2% 32.5% 31.3% 27.8 %
Operating Expenses........ 13.5% 14.9% 17.2% 16.2% 19.0 %
----- ----- ----- ----- -----
Operating Income.......... 17.3% 12.3% 15.3% 15.1% 8.8 %
Interest Expense, net..... 0.8% 4.2% 10.6% 10.8% 9.6 %
----- ----- ----- ----- -----
Income (Loss) before
Income Tax............... 16.5% 8.1% 4.7% 4.3% (0.8)%
Income Tax Expense
(Benefit)................ 0.1% -- 1.9% 1.8% (0.1)%
----- ----- ----- ----- -----
Income (Loss) Before
Extraordinary Item....... 16.4% 8.1% 2.8% 2.5% (0.7)%
Extraordinary Loss........ -- -- 0.2% 0.2% --
----- ----- ----- ----- -----
Net Income (Loss)......... 16.4% 8.1% 2.6% 2.3% (0.7)%
===== ===== ===== ===== =====
</TABLE>
The following discussion compares the results of operations and financial
condition prior to the Acquisition ("Predecessor Periods"), the results of
operations and financial condition subsequent to the
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Acquisition ("PiRod Periods"), and, in certain cases, the combined results of
the Predecessor and PiRod ("Combined Periods"). Predecessor Periods, PiRod
Periods and Combined Periods are not entirely comparable due to the change in
accounting basis arising from the Acquisition.
Nine Months Ended September 27, 1998 Compared to September 28, 1997
Net sales for the nine months ended September 27, 1998 were $40.8 million as
compared to $37.8 million for the nine months ended September 28, 1997, an
increase of $3.0 million or 7.9%. The increase in sales was primarily in guyed
tower and parts and accessories products for wireless communications
structures. The guyed tower product line has benefited from increased sales
penetration to one of PiRod's largest customers. Sales in parts and accessories
continued to increase due to customer emphasis on multiple antenna locations
(co-location) on existing towers and increased market exposure.
Gross profit was $11.4 million for the nine months ended September 27, 1998
as compared to $11.8 million for the nine months ended September 28, 1997, a
decrease of $0.4 million or 3.4%. As a percentage of sales, gross profit
decreased to 27.8% for the nine months ended September 27, 1998 as compared to
31.3% for the nine-month period ended September 28, 1997. The 3.5 percentage
point decrease was primarily due to increased price concessions that were
partially offset by sales volume and product mix.
Selling, general and administrative ("SG&A") expenses were $7.8 million for
the nine months ended September 27, 1998 versus $6.1 million for the nine
months ended September 28, 1997, an increase of $1.7 million or 27.9%. The
increase in SG&A was due to increased employment costs for additional technical
staffing necessary for projected customer build out programs, employee benefit
and incentive compensation expenses, marketing and advertising-related costs
for trade shows and professional fees.
Interest expense was $4.0 million for the nine months ended September 27,
1998 as compared to $4.2 million for the nine months ended September 28, 1997,
a decrease of $0.2 million or 4.8%. The decrease in interest expense was
primarily due to a reduction in total indebtedness outstanding during 1998
versus 1997.
Income tax benefit was $0.1 million for the nine months ended September 27,
1998 as compared to expense of $0.7 million for the nine months ended September
28, 1997. The effective tax rate for the nine months ended September 27, 1998
was approximately (15)%, as compared to approximately 41% for the nine months
ended September 28, 1997. The change in the effective tax rate results from
PiRod's permanent differences, which are attributable primarily to non-
deductible goodwill, being a larger percentage of the lower pre-tax loss
realized during the nine months ended September 27, 1998, as compared to pre-
tax income earned during the nine months ending September 28, 1997.
Year Ended December 28, 1997 Compared to December 29, 1996 (Combined)
Net sales for the year ended December 28, 1997 were $50.7 million as
compared to $49.6 million for the year ended December 29, 1996, an increase of
$1.1 million or 2.2%. The increase in sales was primarily due to continued
growth in self-supporting towers, guyed towers, and parts and accessories
products offset by reductions in monopole sales. The growth in self-supporting
and guyed towers was due primarily to a shift in customer build-out programs
from urban to rural construction sites. Generally, customers favor self-
supporting and guyed towers for rural applications due to land availability and
less zoning restrictions. Sales increases in parts and accessories were due to
customer emphasis on multiple antenna locations (co-location) on existing
towers and increased market exposure. The decline in monopole sales was
attributable to the shift in build-out programs from urban areas to rural areas
and an overall surplus in customer monopole inventory levels.
Gross profit was $16.5 million for the year ended December 28, 1997 as
compared to $13.5 million for the year ended December 29, 1996, an increase of
$3.0 million or 22.2%. As a percentage of sales, gross profit increased to
32.5% for the year ended December 28, 1997 as compared to 27.2% for the year
ended December 29, 1996. The 5.3 percentage point increase was primarily due to
product mix shifts from lower margin and price sensitive monopole sales in
1996, to parts and accessories and self-supporting and guyed towers in 1997. In
addition, the cost of sales figures for 1996 included a $0.9 million charge to
cost of sales for inventories that
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<PAGE>
were written up to fair market value at the date of the Acquisition in
accordance with Accounting Principles Board Opinion No. 16 ("APB 16").
SG&A expenses were $8.7 million for the year ended December 28, 1997 as
compared to $7.4 million for the year ended December 29, 1996, an increase of
$1.3 million or 17.6%. The increase in SG&A expenses was primarily due to
increased amortization of intangible assets associated with the Acquisition and
new employee costs, offset by a decrease in incentive compensation earned by
employees.
Interest expense was $5.5 million for the year ended December 28, 1997 as
compared to $2.2 million for the year ended December 29, 1996, an increase of
$3.3 million or 150.0%. The increase in 1997 was primarily related to the full-
year impact of interest expense associated with the indebtedness incurred by
PiRod to finance the Acquisition.
Income tax expense was $1.0 million for the year ended December 28, 1997 as
compared to $0.0 million for the year ended December 29, 1996, an increase of
$1.0 million. The increase was attributable to the Predecessor being treated as
an S Corporation for federal income taxes purposes and, as such, federal tax on
the net income of the Predecessor was paid directly by its individual
shareholders.
Year Ended December 29, 1996 (Combined) Compared to December 31, 1995
Net sales for the year ended December 29, 1996 were $49.6 million as
compared to $33.4 million for the year ended December 31, 1995, an increase of
$16.2 million or 48.5%. The sales increase was primarily related to the
beginning of the wireless communications industry's PCS build-out. Although all
tower, monopole and parts and accessory product lines had sales increases, the
monopole product line experienced the largest increase in sales during the year
ended December 29, 1996. Generally, sales of monopole products benefited from
the fact that monopoles are generally found to be more aesthetically pleasing
and from zoning changes which have reduced the amount of space available for
urban construction sites, making monopole products (which require less space
than other tower products) more desirable.
Gross profit was $13.5 million for the year ended December 29, 1996 as
compared to $10.3 million for the year ended December 31, 1995, an increase of
$3.2 million or 31.1%. As a percentage of sales, gross profit decreased to
27.2% for the year ended December 29, 1996 as compared to 30.8% for the year
ended December 31, 1995. The 3.6 percentage point decrease was primarily due to
a product mix shift to lower margin monopole sales, a $0.9 million charge to
cost of sales for inventories that were written up to fair market value at the
date of the Acquisition in accordance with APB 16 and employee benefit cost
increases. These decreases were partially offset by increased sales volume.
SG&A expenses were $7.4 million for the year ended December 29, 1996 as
compared to $4.5 million for the year ended December 31, 1995, an increase of
$2.9 million or 64.4%. The increase was primarily due to increased headcount
and the associated benefit costs required to maintain customer service and
delivery performance. In addition, SG&A expenses increased due to amortization
of intangible assets associated with the Acquisition.
Interest expense was $2.2 million for the year December 29, 1996 as compared
to $0.4 million for the year ended December 31, 1995, an increase of $1.8
million. The increase was primarily related to the indebtedness incurred by
PiRod to finance the Acquisition.
Income tax expense was $0.0 million for the years ended December 29, 1996
and December 31, 1995. For both years, the Predecessor was treated as an S
Corporation for federal income taxes purposes and, as such, federal tax on the
net income of the Predecessor was paid directly by its individual shareholders.
Liquidity and Capital Resources
Historically, PiRod has financed its operations primarily through internally
generated funds and proceeds from revolving credit facilities. Working capital
at September 27, 1998 was ($35.1) million as compared to $11.0 million at
December 28, 1997, a decrease of $46.1 million. The decrease in working capital
was
49
<PAGE>
primarily due to the reclassification of $47.6 million of long-term debt due to
PiRod being in default under the terms of its Credit Agreement and Senior Notes
as discussed further below.
Cash provided by operating activities of $1.8 million for the nine months
ended September 27, 1998 was negatively impacted by increases of $0.8 million
and $0.8 million in accounts receivable and inventories, respectively, that
were partially offset by increased accounts payable and accrued expenses of
$1.4 million and increased customer deposits of $0.3 million. The increase in
accounts receivable and inventories are primarily due to increased sales volume
and projected sales growth. Cash provided by operating activities for 1997,
1996 and 1995 was $2.7 million, $5.0 million and $4.3 million, respectively. In
1997, cash provided by operating activities was negatively impacted by a
decrease in customer deposits and an increase in inventories. In 1996, cash
provided by operating activities was negatively impacted by an increase in
accounts receivable that was partially offset by increased accounts payable,
accrued expenses and customer deposits. Cash provided by operating activities
in 1995 was negatively impacted by increased inventories that were partially
offset by a decrease in accounts receivable.
Cash used for investing activities of $0.9 million for the nine months ended
September 27, 1998 was primarily capital expenditures for replacement of
delivery and manufacturing equipment and office renovations. Cash used for
investing activities for 1997, 1996 and 1995 was $0.1 million, $51.3 million
and $1.1 million, respectively. Investing activities in 1997 were primarily
capital expenditures for a manufacturing plant expansion, purchase of an office
building, land and replacement equipment that were partially offset by a
purchase price adjustment relating to the Acquisition. The 1996 investing
activities were primarily for the acquisition of the Predecessor and capital
expenditures. Investing activities in 1995 were primarily for capital
expenditures.
Cash used in financing activities for the nine months ended September 27,
1998 was $1.8 million. This was primarily due to payments of indebtedness
associated with the Acquisition. Cash used in financing activities for 1997 of
$3.1 million was primarily for repayment for indebtedness associated with the
Acquisition. In 1996, PiRod had cash proceeds of $48.9 million primarily from
the issuance of debt and stock associated with the Acquisition that were offset
by common stock dividends declared by the Predecessor. Cash used in financing
activities in 1995 of $3.1 million was primarily for common stock dividends
declared by the Predecessor.
As of September 27, 1998, PiRod was in default under certain terms of its
Credit Agreement and Senior Notes. This default resulted from failure to
maintain compliance with certain of the financial covenants included therein.
As a result of these defaults, the lenders can elect to declare all outstanding
amounts of principal and accrued interest due and payable. PiRod has requested
a modification of the financial covenants from the lender; however, such
modification has not yet been received. Under the terms of the Merger
Agreement, all principal and interest outstanding under the Credit Agreement
and Senior Notes will be repaid at the closing of the merger transactions.
Seasonality
PiRod has experienced fluctuations in its quarterly results that are
expected to continue due to weather-related foundation installation and
construction delays, customer ability to obtain local government zoning
approval and timing of the customer capital planning and expenditure approval
process.
Inflation
PiRod believes that inflation has not had a material impact on the results
of operations of PiRod or the Predecessor during the periods described above.
Year 2000
The Year 2000 issue is a result of computer programs written using two
digits rather than four digits to define applicable date fields. These date
fields may recognize a date using "00" as the year 1900 rather than 2000.
Information systems have time sensitive operations that, if they fail, could
disrupt activities in the normal course of business.
50
<PAGE>
PiRod currently operates under two internal business software systems
including a proprietary engineering and inventory management system and an
accounting and purchasing operating system. As of this time, one of these
operating systems is Year 2000 compliant. The proprietary engineering and
inventory management system has a variety of database and analysis programs,
all of which have been written in software languages that store a four digit
date and can perform date calculations beyond Year 2000.
PiRod's current versions of the accounting and purchasing operating system
are not Year 2000 compliant; however, PiRod has purchased upgraded versions
that are Year 2000 compliant. In addition, PiRod has engaged consulting firms
to provide additional software modifications and evaluation of add-on software
packages to the operating system. Total expenses and commitments associated
with the accounting and purchasing system's development have been estimated at
less than $100,000. Although it is anticipated that the systems installation
will be finished in 1999, there is no assurance that the installation and
testing will be completed in a timely manner. If not completed by the end of
1999, there could be a material impact on the operations of the business.
PiRod has selected an internal resource to focus on customer and supplier-
related Year 2000 issues. This program is in the initial stages of development
but it is expected to include questionnaires to be completed by critical
suppliers and customers to determine the extent that Year 2000 conversion
issues may affect them. Other than a limited list of computer numeric
controlled machine manufacturers, PiRod has not yet received information
regarding the status of its suppliers' and customers' Year 2000 compliance. If
any supplier or customer does not achieve Year 2000 compliance, there could be
a material impact on the operations of the business.
PiRod has not developed a contingency plan to address issues related to its
inability to complete the necessary programming and testing to achieve Year
2000 compliance.
51
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The unaudited pro forma condensed combined financial statements set forth
below should be read in conjunction with the historical consolidated financial
statements and notes thereto of ROHN Industries, Inc. and its subsidiaries
incorporated by reference herein and the historical consolidated financial
statements and notes of PiRod Holdings, Inc. and its subsidiary appearing
elsewhere herein. The following unaudited pro forma consolidated statements of
operations for the nine months ended September 30, 1998 and 1997 and for the
year ended December 31, 1997, give effect to the transactions as if they had
occurred at January 1, 1997, and the following unaudited proforma consolidated
balance sheet gives effect to the transactions as if they had occurred on
September 30, 1998.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. Although management has
used its best judgment in estimating the fair value of the net assets, various
pending studies, analyses and operational decisions may result in significant
changes in the current estimates and corresponding changes of the goodwill
balance. Additionally, the pro forma results of operations exclude certain non-
recurring charges that will arise in the first year of post-acquisition
activity, such as the write-off of the fair value step-up to PiRod's inventory
and certain restructuring provisions that will be made in the integration of
both companies' operations. The pro forma financial information is presented
for informational purposes only, and does not purport to represent what the
results of operations or financial condition would actually have been had the
transactions in fact occurred on the dates set forth above or to project ROHN's
results of operations or financial condition for any future period or as of any
date, respectively.
52
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1998
(in thousands, except per share data)
<TABLE>
<CAPTION>
Rohn PiRod Combined Pro Forma Combined
Historical Historical Historical Adjustments Pro Forma
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales............... $128,537 $40,849 $169,386 $169,386
Cost of product sold.... 95,651 29,481 125,132 133 (3c) 125,265
-------- ------- -------- ------- --------
Gross profit............ 32,886 11,368 44,254 (133) 44,121
Operating Expenses:
Selling, general &
administrative....... 13,844 7,770 21,614 48 (3a) 21,662
-------- ------- -------- ------- --------
Operating Income........ 19,042 3,598 22,640 (181) 22,459
Interest expense, net... 383 3,918 4,301 7,304 (3b) 11,605
-------- ------- -------- ------- --------
Income (loss) before
income taxes........... 18,659 (320) 18,339 (7,485) 10,854
Income tax provision.... 7,075 (48) 7,027 (2,826)(3d) 4,201
Equity loss of joint
venture................ 233 -- 233 233
-------- ------- -------- ------- --------
Income (loss) before
extraordinary item..... $ 11,351 $ (272) $ 11,079 $(4,659) 6,420
======== ======= ======== ======= ========
EBITDA (3e)............. $ 21,523 $ 5,912 $ 27,435 -- $ 27,435
======== ======= ======== ======= ========
Earnings per share--
basic and diluted...... $ 0.22 $ 0.20
Weighted average number
of shares
outstanding (3f)
Basic................. 52,758 32,629
Diluted............... 52,765 32,924
</TABLE>
The accompanying notes are an integral part of these statements
53
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
Rohn PiRod Combined Pro Forma Combined
Historical Historical Historical Adjustments Pro Forma
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales............... $114,042 $37,768 $151,810 $151,810
Cost of product sold.... 80,390 25,955 106,345 133 (3c) 106,478
-------- ------- -------- ------- --------
Gross profit............ 33,652 11,813 45,465 (133) 45,332
Operating Expenses:
Selling, general &
administrative....... 12,679 6,111 18,790 48 (3a) 18,838
Restructuring charge.. 3,420 -- 3,420 3,420
-------- ------- -------- ------- --------
Operating Income........ 17,553 5,702 23,255 (181) 23,074
Interest expense, net... 587 4,082 4,669 6,936 (3b) 11,605
-------- ------- -------- ------- --------
Income before income
taxes.................. 16,966 1,620 18,586 (7,117) 11,469
Income tax provision.... 6,450 659 7,109 (2,686)(3d) 4,423
-------- ------- -------- ------- --------
Income before
extraordinary item..... $ 10,516 $ 961 $ 11,477 $(4,431) $ 7,046
======== ======= ======== ======= ========
EBITDA (3e)............. $ 19,454 $ 7,921 $ 27,375 $ -- $ 27,375
======== ======= ======== ======= ========
Earnings per share--
basic and diluted...... $ 0.20 $ 0.22
Weighted average number
of shares outstanding
(3f)
Basic................. 52,452 32,323
Diluted............... 52,557 32,716
</TABLE>
The accompanying notes are an integral part of these statements
54
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
Rohn PiRod Combined Pro Forma Combined
Historical Historical Historical Adjustments Pro Forma
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales......................................... $158,132 $50,706 $208,838 $208,838
Cost of product sold.............................. 111,124 34,254 145,378 178 (3c) 145,556
-------- ------- -------- ------- --------
Gross profit...................................... 47,008 16,452 63,460 (178) 63,282
Operating Expenses:
Selling, general & administrative............... 17,129 8,715 25,844 64 (3a) 25,908
Restructuring charge............................ 3,420 -- 3,420 3,420
-------- ------- -------- ------- --------
Operating Income.................................. 26,459 7,737 34,196 (242) 33,954
Interest expense, net............................. 477 5,377 5,854 9,619 (3b) 15,473
Other expense (income)............................ (4,088) -- (4,088) (4,088)
-------- ------- -------- ------- --------
Income before income taxes........................ 30,070 2,360 32,430 (9,861) 22,569
Income tax provision.............................. 11,151 960 12,111 (3,723)(3d) 8,388
-------- ------- -------- ------- --------
Income before extraordinary item.................. $ 18,919 $ 1,400 $ 20,319 $(6,138) $ 14,181
======== ======= ======== ======= ========
EBITDA (3e)....................................... $ 29,093 $10,709 $ 39,802 $ -- $ 39,802
======== ======= ======== ======= ========
Earnings per share
Basic........................................... $ 0.36 $ 0.44
Diluted......................................... $ 0.36 $ 0.43
Weighted average number of shares outstanding (3f)
Basic........................................... 52,475 32,346
Diluted......................................... 52,558 32,717
</TABLE>
The accompanying notes are an integral part of these statements
55
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 1998
(in thousands)
<TABLE>
<CAPTION>
Combined
Rohn PiRod Combined Pro Forma Pro
Assets Historical Historical Historical Adjustments Forma
------ ---------- ---------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents.. $ 5,042 $ 1,104 $ 6,146 $ (6,146)(4b) $ (6,635)
(6,635)(4b)
Accounts receivable, net... 31,813 9,308 41,121 41,121
Inventories, net........... 31,599 8,496 40,095 1,074 (4a) 41,169
Deferred income taxes...... 4,450 420 4,870 (420)(4c) 4,462
12 (4c)
Prepaid expenses and other. 638 296 934 934
Net assets of discontinued
operations................ 1,333 -- 1,333 1,333
-------- ------- -------- -------- --------
Total Current Assets......... 74,875 19,624 94,499 (12,115) 82,384
-------- ------- -------- -------- --------
Plant and Equipment, net..... 26,453 7,739 34,192 1,497 (4a) 35,689
Other Assets:
Goodwill, net.............. -- 5,152 5,152 (5,152)(4a) 56,466
54,189 (4a)
2,277 (4c)
Intangible assets, net..... -- 16,439 16,439 (16,439)(4a) --
Deferred financing costs,
net....................... -- 1,462 1,462 (1,462)(4a) 8,800
8,800 (4a)
Deferred income taxes...... -- 1,399 1,399 (1,399)(4c) --
Other assets............... 5,733 -- 5,733 5,733
-------- ------- -------- -------- --------
Total Assets........... $107,061 $51,815 $158,876 $ 30,196 $189,072
======== ======= ======== ======== ========
<CAPTION>
Liabilities and Stockholders'
Equity (Deficit)
- -----------------------------
<S> <C> <C> <C> <C> <C>
Current Liabilities:
Current portion of long-
term liabilities.......... $ 1,000 47,563 $ 48,563 $ (1,000)(4a) $ --
(47,563)(4a)
Accounts payable........... 8,863 1,936 10,799 10,799
Accrued expenses........... 9,959 4,570 14,529 14,529
Accrued income taxes....... 6,968 -- 6,968 6,968
Customer deposits.......... -- 703 703 703
-------- ------- -------- -------- --------
Total Current Liabilities.... 26,790 54,772 81,562 (48,563) 32,999
-------- ------- -------- -------- --------
Long-term Liabilities........ 10,507 311 10,818 (311)(4a) 166,500
(10,507)(4a)
166,500 (4b)
Deferred Income Taxes........ -- -- -- 470 (4c) 470
Stockholders' Equity
Common stock............... 535 2 537 76 (4a) 333
(2)(4a)
(278)(4a)
Capital surplus............ 13,199 14,210 27,409 24,263 (4a) 37,462
(14,210)(4a)
Unallocated purchase price. -- (18,467) (18,467) 18,467 (4a) --
Retained earnings.......... 61,811 987 62,798 (987)(4a) 61,811
Treasury stock............. (3,896) -- (3,896) (104,722)(4a) (108,618)
Unearned portion of
restricted stock.......... (1,885) -- (1,885) (1,885)
-------- ------- -------- -------- --------
Total Stockholders'
Equity (Deficit)...... 69,764 (3,268) 66,496 (77,393) (10,897)
-------- ------- -------- -------- --------
Total Liabilities and
Stockholders' Equity
(Deficit)............. $107,061 $51,815 $158,876 $ 30,196 $189,072
======== ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements
56
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
1) Basis of Presentation.
The purchase method of accounting has been used in the preparation of the
accompanying unaudited pro forma combined condensed financial statements. Under
this method of accounting, the aggregate purchase price is allocated to
specific assets acquired and liabilities assumed based on their estimated fair
values. For purposes of the unaudited pro forma combined condensed financial
statements, the preliminary fair values of PiRod's assets and liabilities were
estimated by ROHN's management based primarily on its knowledge of tower
manufacturing and on information furnished by PiRod's management. The final
allocation of the purchase price will not be determined until after the
consummation of the Merger and will be based on a final evaluation of PiRod's
assets acquired and liabilities assumed at the closing date, adjusted to be
consistent with ROHN's accounting policies. All required work to fully evaluate
the assets and liabilities of PiRod's acquired by ROHN will not be completed by
the closing date and purchase accounting adjustments may not be finalized for
up to one year after the closing date. The unaudited pro forma combined
condensed financial information is presented for the nine months ended
September 30, 1998 and 1997 and for the year ended December 31, 1997. PiRod has
a 52-53 week fiscal year ending on the last Sunday of either the quarter and/or
the year. PiRod's 1998 third fiscal quarter ended on September 27, 1998, its
1997 fiscal year ended on December 28, 1997 and its 1997 third fiscal quarter
ended September 28, 1997.
2) Merger Information.
Pursuant to the Merger Agreement, PiRod will be merged into ROHN, and each
share of ROHN Common Stock outstanding immediately prior to the merger will be
converted into the right to receive $3.78 in cash at the election of ROHN
stockholders, or will be retained by the ROHN Stockholders. The maximum number
of ROHN shares to be cashed out will be determined by dividing the cash
available from borrowings and cash on hand by $3.78, but in no event more than
27,777,777 shares. Outstanding PiRod shares will be converted into a total of
approximately 7.65 million ROHN shares of common stock and outstanding PiRod
options and warrants will be converted into ROHN options and warrants to
purchase 724,000 shares of ROHN common stock.
3) Pro Forma Adjustments for Consolidated Statements of Operations.
a) Represents an increase in amortization resulting from the preliminary
purchase price allocation in accordance with the purchase method of accounting.
Goodwill is amortized over 30 years. Annual amortization is approximately $2.0
million.
<TABLE>
<CAPTION>
Nine Months Nine Months Year
Ended Ended Ended
September 30, September 30, December 31,
1998 1997 1997
------------- ------------- ------------
<S> <C> <C> <C>
Amortization on PiRod's historical
intangible assets................ $(1,364) $(1,364) $(1,818)
Amortization on the Company's
newly-created goodwill........... 1,412 1,412 1,882
------- ------- -------
Total........................... $ 48 $ 48 $ 64
======= ======= =======
</TABLE>
b) Represents the elimination of interest expense related to the historical
debt outstanding and the incurrence of interest expense related to borrowings
under new senior indebtedness to finance the Merger.
57
<PAGE>
<TABLE>
<CAPTION>
Nine Months Nine Months Year
Ended Ended Ended
September 30, September 30, December 31,
1998 1997 1997
------------- ------------- ------------
<S> <C> <C> <C>
Interest expense, net on the
companies' historical debt........ $(4,301) $(4,669) $(5,854)
Interest expense, net on the senior
indebtedness at an assumed rate of
8.5%.............................. 10,615 10,615 14,153
Amortization of debt issuance
costs............................. 990 990 1,320
------- ------- -------
Total............................ $ 7,304 $ 6,936 $ 9,619
======= ======= =======
</TABLE>
Borrowings under the new senior indebtedness bear interest at a floating
rate based on either LIBOR or a prime rate, plus a margin. A 1/8% change in the
interest rate would change annual interest expense by approximately $0.2
million.
c) Represents the incremental depreciation expense resulting from the
preliminary purchase price allocation in accordance with the purchase method of
accounting. Of the $1.5 million allocated to property, plant and equipment,
$0.1 million was allocated to land, $0.2 million was allocated to buildings
(depreciated over a 30 year life) and $1.2 million was allocated to machinery
and equipment (depreciated over a 7 year life).
d) Represents the tax effect of all adjustments, excluding the amortization
of non-deductible goodwill, using a combined statutory income tax rate of
approximately 38%.
e) EBITDA is defined as income from operations plus depreciation and
amortization. EBITDA is presented because it is a widely accepted financial
indicator of a company's ability to incur and service debt. EBITDA should not
be considered by an investor as an alternative to income from operations as
determined in accordance with generally accepted accounting principles, as an
indicator of the operating performance of the Company or as an alternative to
cash flows from operations as a measure of liquidity.
f) The pro forma weighted average number of shares were adjusted as follows
(it was assumed that all PiRod outstanding options are considered currently
dilutive):
<TABLE>
<CAPTION>
Nine Months Nine Months Year
Ended Ended Ended
September 30, September 30, December 31,
1998 1997 1997
------------- ------------- ------------
<S> <C> <C> <C>
Basic:
Weighted average--ROHN........... 52,758 52,452 52,475
Shares repurchased by ROHN....... (27,777) (27,777) (27,777)
Shares issued to PiRod
shareholders.................... 7,648 7,648 7,648
------- ------- -------
Total.......................... 32,629 32,323 32,346
======= ======= =======
Diluted:
Weighted average--ROHN........... 52,765 52,557 52,558
Shares repurchased by ROHN....... (27,777) (27,777) (27,777)
Shares issued to PiRod
shareholders.................... 7,648 7,648 7,648
Effect of dilutive options and
warrants issued to PiRod
shareholders.................... 288 288 288
------- ------- -------
Total.......................... 32,924 32,716 32,717
======= ======= =======
</TABLE>
58
<PAGE>
4) Pro Forma Adjustments for Consolidated Balance Sheet.
a) Represents the adjustment to record the merger in accordance with the
purchase method of accounting
<TABLE>
<S> <C>
Repurchase of approximately 27.8 million shares from
ROHN stockholders electing cash................................... $105,000
Refinance existing PiRod debt...................................... 47,874
Refinance existing ROHN debt....................................... 11,507
Deferred financing costs........................................... 8,800
--------
173,181
Issuance of approximately 7.65 million shares to PiRod
stockholders...................................................... 23,250
Value of options and warrants issued to PiRod stockholders......... 1,089
Acquisition cost................................................... 6,100
--------
30,439
Total............................................................ $203,620
========
</TABLE>
The resultant pro forma purchase price entries are as follows:
<TABLE>
<S> <C>
Fixed assets....................................................... $ 1,497
Inventory.......................................................... 1,074
Common stock....................................................... 14,212
Retained earnings.................................................. 987
Deferred taxes..................................................... (2,277)
Elimination of historical unallocated purchase price............... (18,467)
Elimination of historical goodwill................................. (5,152)
Elimination of historical intangible assets........................ (16,439)
Elimination of historical deferred financing costs................. (1,462)
Goodwill........................................................... 56,466
--------
$ 30,439
========
</TABLE>
b) In order to finance the merger and related fees and expenses, ROHN used
the borrowings under the new senior indebtedness, equity issuance and
anticipated cash on hand.
<TABLE>
<S> <C>
Proceeds from the senior indebtedness............................ $166,500
Issuance of ROHN shares to PiRod stockholders.................... 23,250
Value of options and warrants issued to PiRod stockholders....... 1,089
Actual cash on hand as of September 30, 1998..................... 6,146
Anticipated cash on hand as of date of closing................... 6,635(1)
--------
$203,620
========
</TABLE>
- --------
(1) Represents the anticipated cash on hand at the time the Merger is
consummated. The Merger Agreement requires a reduction in the number of
shares repurchased by ROHN if the amount of cash on hand is less than
$12.8 million.
c) Represents the adjustment to deferred taxes resulting from the
allocation of purchase price to the fair values of assets and liabilities
acquired.
59
<PAGE>
HISTORICAL FINANCIAL STATEMENTS OF PIROD
Index to Financial Statements
PiRod Holdings, Inc. Unaudited Interim Financial Statements:
<TABLE>
<S> <C>
Consolidated Balance Sheets as of September 27, 1998 and December 28,
1997.................................................................... 61
Consolidated Statements of Operations for the nine months ended September
27, 1998 and September 28, 1997......................................... 62
Consolidated Statements of Cash Flows for the nine months ended September
27, 1998 and September 28, 1997......................................... 63
Notes to the Consolidated Financial Statements........................... 64
PiRod Holdings, Inc. Audited Consolidated Financial Statements:
Report of Independent Accountants........................................ 65
Consolidated Balance Sheets as of December 28, 1997 and December 29,
1996.................................................................... 66
Consolidated Statements of Operations for the year ended December 28,
1997 and the period from July 24, 1996 (inception) to December 29, 1996. 67
Consolidated Statements of Stockholders' Deficit for the year ended
December 28, 1997 and the period from July 24, 1996 (inception) to
December 29, 1996....................................................... 68
Consolidated Statements of Cash Flows for the year ended December 28,
1997 and the period from July 24, 1996 (inception) to December 29, 1996. 69
Notes to the Consolidated Financial Statements........................... 70
PiRod, Inc. ("Predecessor") Unaudited Financial Statements:
Balance Sheets as of August 27, 1996 and December 31, 1995............... 80
Statements of Operations for the eight months ended August 27, 1996 and
the year ended December 31, 1995........................................ 81
Statements of Stockholders' Equity for the eight months ended August 27,
1996 and the year ended December 31, 1995............................... 82
Statements of Cash Flows for the eight months ended August 27, 1996 and
the year ended December 31, 1995........................................ 83
Notes to the Financial Statements........................................ 84
</TABLE>
60
<PAGE>
PIROD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 27, December
1998 28, 1997
------------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents......................... $ 1,104,000 $ 2,043,000
Accounts receivable, net.......................... 9,308,000 8,546,000
Inventories....................................... 8,496,000 7,743,000
Deferred income taxes............................. 420,000 145,000
Prepaid expenses and other assets................. 296,000 134,000
------------ -----------
Total current assets............................ 19,624,000 18,611,000
Property, plant and equipment, net.................. 7,739,000 7,549,000
Deferred income taxes............................... 1,399,000 1,399,000
Goodwill and other intangible assets, net........... 21,591,000 22,955,000
Deferred financing costs, net....................... 1,462,000 1,727,000
------------ -----------
$ 51,815,000 $52,241,000
============ ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT
<S> <C> <C>
Current liabilities:
Current portion of long-term debt................. $ 47,563,000 $ 2,000,000
Accounts payable.................................. 1,936,000 1,006,000
Customer deposits................................. 703,000 421,000
Accrued expenses.................................. 4,570,000 4,144,000
------------ -----------
Total current liabilities....................... 54,772,000 7,571,000
Long-term debt...................................... 311,000 47,666,000
------------ -----------
Total liabilities............................... 55,083,000 55,237,000
------------ -----------
Stockholders' deficit:
Class L common stock, $0.001 par value; 90,000
shares authorized, 76,776 shares issued and
outstanding...................................... 1,000 1,000
Class A common stock, $0.001 par value; 19,910,000
shares authorized, 781,104 shares issued and
outstanding...................................... 1,000 1,000
Additional paid-in capital........................ 14,210,000 14,210,000
Unallocated purchase price........................ (18,467,000) (18,467,000)
Retained earnings................................. 987,000 1,259,000
------------ -----------
Total stockholders' deficit..................... (3,268,000) (2,996,000)
------------ -----------
$ 51,815,000 $52,241,000
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
61
<PAGE>
PIROD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
---------------------------
September 27, September 28,
1998 1997
------------- -------------
<S> <C> <C>
Net sales.......................................... $40,849,000 $37,768,000
Cost of sales...................................... 29,481,000 25,955,000
----------- -----------
Gross profit....................................... 11,368,000 11,813,000
Selling, general and administrative expenses....... 7,770,000 6,111,000
----------- -----------
Income from operations............................. 3,598,000 5,702,000
Other expense (income):
Interest expense................................. 3,977,000 4,179,000
Interest income.................................. (59,000) (97,000)
----------- -----------
Income (loss) before income taxes and extraordinary
item.............................................. (320,000) 1,620,000
Income tax expense (benefit)....................... (48,000) 659,000
----------- -----------
Income (loss) before extraordinary item............ (272,000) 961,000
Extraordinary loss on redemption of long-term debt,
net of income tax benefit of $61,000.............. -- 82,000
----------- -----------
Net income (loss).................................. $ (272,000) $ 879,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
62
<PAGE>
PIROD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
---------------------------
September 27, September 28,
1998 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................ $ (272,000) $ 879,000
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization.................. 2,314,000 2,219,000
Loss on sale of property, plant and equipment.. 27,000 3,000
Extraordinary loss on redemption of long-term
debt, net of income tax benefit............... -- 82,000
Deferred income taxes.......................... (275,000) --
Increase (decrease) in cash resulting from
changes in operating assets and liabilities:
Accounts receivable.......................... (762,000) 1,092,000
Inventories.................................. (753,000) (1,415,000)
Prepaid expenses and other assets............ (162,000) 57,000
Accounts payable and accrued expenses........ 1,356,000 431,000
Customer deposits............................ 282,000 (1,213,000)
----------- -----------
Net cash provided by operating activities.......... 1,755,000 2,135,000
----------- -----------
Cash flows from investing activities:
Purchase price adjustment arising from
acquisition of the Predecessor.................. -- 1,655,000
Purchases of property, plant and equipment....... (953,000) (1,580,000)
Proceeds from sale of property, plant and
equipment....................................... 88,000 7,000
----------- -----------
Net cash provided by (used in) investing
activities........................................ (865,000) 82,000
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt......... 1,235,000 1,000,000
Repayments of long-term debt..................... (3,000,000) (4,000,000)
Payment of financing costs....................... -- (20,000)
Principal repayments under capital lease
obligations..................................... (64,000) (50,000)
----------- -----------
Net cash used in financing activities.............. (1,829,000) (3,070,000)
----------- -----------
Net decrease in cash and cash equivalents.......... (939,000) (853,000)
Cash and cash equivalents, beginning of period..... 2,043,000 2,542,000
----------- -----------
Cash and cash equivalents, end of period........... $ 1,104,000 $ 1,689,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
63
<PAGE>
PIROD HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying consolidated financial statements for the nine months ended
September 27, 1998 and September 28, 1997, reflect the financial position,
results of operations and cash flows of PiRod Holdings, Inc. ("PiRod") and its
wholly-owned subsidiary, PiRod, Inc. All significant intercompany balances and
transactions have been eliminated in consolidation.
The accompanying consolidated financial statements are unaudited; however,
in the opinion of management, such financial statements contain all of the
necessary adjustments (all being of a normal and recurring nature) to fairly
present the financial position, results of operations and cash flows of PiRod
for the interim periods presented. Although these statements do not include all
of the information and footnotes required by generally accepted accounting
principles, PiRod believes that the disclosures made are adequate to make the
information presented not misleading. The results of operations for interim
periods are not necessarily indicative of those to be expected for a full year.
These financial statements should be read in conjunction with PiRod's audited
financial statements for the year ended December 28, 1997 and the period from
July 24, 1996 (inception) to December 29, 1996 which are filed herein as part
of this Proxy Statement/Prospectus.
2. Inventories
Inventories consist of the following:
<TABLE>
<S> <C>
Raw materials.................................................. $ 730,000
Work-in-process................................................ 1,768,000
Finished goods................................................. 5,998,000
----------
$8,496,000
==========
</TABLE>
3. Events of Default
As of September 27, 1998, PiRod was in default under the terms of the Credit
Agreement and the Senior Notes. These defaults resulted from PiRod's failure to
remain in compliance with certain of the financial covenants included therein.
PiRod has requested a modification of the respective financial covenants from
the lender; however, such modification has not yet been received. As a result
of these defaults, the lenders can at any time elect to declare all outstanding
amounts of principal and accrued interest due and payable and, therefore, the
principal amounts outstanding under the Credit Agreement and the Senior Notes
have been recorded in the current portion of long-term debt on the September
27, 1998 balance sheet. Under the terms of the agreement and plan of merger
discussed in Note 4 below, all principal and interest outstanding under the
Credit Agreement and the Senior Notes will be repaid at closing.
4. Subsequent Event
On December 22, 1998, PiRod entered into an agreement and plan of merger
with ROHN Industries, Inc. ("ROHN"). In connection with this agreement, PiRod
will be merged with and into ROHN, with ROHN continuing as the surviving
corporation of the merger. Consummation of the merger is subject to various
conditions, including, but not limited to, approval by the shareholders of
PiRod and ROHN. Each of PiRod's Class A shares shall be converted into the
right to receive 3.7282 shares of ROHN common stock and each of PiRod's Class L
shares shall be converted into the right to receive 61.6859 shares of ROHN
common stock.
64
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of PiRod Holdings, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' deficit and of cash
flows present fairly, in all material respects, the financial position of PiRod
Holdings, Inc. and its subsidiary at December 28, 1997 and December 29, 1996,
and the results of their operations and their cash flows for the year ended
December 28, 1997 and for the period from July 24, 1996 (inception) to December
29, 1996, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of PiRod's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
March 15, 1998
65
<PAGE>
PIROD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December December
28, 1997 29, 1996
ASSETS ----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 2,043,000 $ 2,542,000
Accounts receivable, trade, net of reserve for
uncollectible accounts of $328,000 and $270,000,
respectively...................................... 8,546,000 8,516,000
Accounts receivable, other......................... -- 1,655,000
Inventories........................................ 7,743,000 7,195,000
Deferred income taxes.............................. 145,000 200,000
Prepaid expenses and other assets.................. 134,000 300,000
----------- -----------
Total current assets............................. 18,611,000 20,408,000
Property, plant and equipment, net................... 7,549,000 6,570,000
Deferred income taxes................................ 1,399,000 1,664,000
Goodwill and other intangible assets, net............ 22,955,000 24,773,000
Deferred financing costs, net........................ 1,727,000 2,060,000
----------- -----------
$52,241,000 $55,475,000
=========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT
<S> <C> <C>
Current liabilities:
Current portion of long-term debt.................. $ 2,000,000 $ --
Accounts payable................................... 1,006,000 2,071,000
Customer deposits.................................. 421,000 1,810,000
Accrued expenses................................... 4,144,000 3,361,000
----------- -----------
Total current liabilities........................ 7,571,000 7,242,000
Long-term debt....................................... 47,666,000 52,547,000
----------- -----------
Total liabilities................................ 55,237,000 59,789,000
----------- -----------
Commitments and contingencies (Note 13)
Stockholders' deficit:
Class L common stock, $0.001 par value; 90,000
shares authorized, 76,776 shares issued and
outstanding....................................... 1,000 1,000
Class A common stock, $0.001 par value; 19,910,000
shares authorized, 781,104 shares issued and
outstanding....................................... 1,000 1,000
Additional paid-in-capital......................... 14,210,000 14,210,000
Unallocated purchase price......................... (18,467,000) (18,467,000)
Retained earnings (accumulated deficit)............ 1,259,000 (59,000)
----------- -----------
Total stockholders' deficit...................... (2,996,000) (4,314,000)
----------- -----------
$52,241,000 $55,475,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
66
<PAGE>
PIROD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
July 24,
1996
Year ended (inception)
December to December
28, 1997 29, 1996
----------- -----------
<S> <C> <C>
Net sales............................................ $50,706,000 $19,339,000
Cost of sales, including purchased inventory step-up
of $909,000 in 1996................................. 34,254,000 14,718,000
----------- -----------
Gross profit......................................... 16,452,000 4,621,000
Selling, general and administrative expenses......... 8,715,000 2,863,000
----------- -----------
Income from operations............................... 7,737,000 1,758,000
Other expense (income):
Interest expense................................... 5,512,000 1,889,000
Interest income.................................... (135,000) (50,000)
----------- -----------
Income (loss) before income taxes and extraordinary
item................................................ 2,360,000 (81,000)
Income tax expense (benefit)......................... 960,000 (22,000)
----------- -----------
Income (loss) before extraordinary item.............. 1,400,000 (59,000)
Extraordinary loss on redemption of long-term debt,
net of income tax benefit of $61,000................ 82,000 --
----------- -----------
Net income (loss).................................... $ 1,318,000 $ (59,000)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
67
<PAGE>
PIROD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Class L Class A
Common Stock Common Stock Additional Unallocated Retained Earnings Total
------------- -------------- Paid-In Purchase (Accumulated Stockholders'
Shares Value Shares Value Capital Price Deficit) Deficit
------ ------ ------- ------ ----------- ------------ ----------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at July 24, 1996
(inception)............ -- $ -- -- $ -- $ -- $ -- $ -- $ --
Issuance of common stock
and common stock
warrants in connection
with the capitalization
of the Company and the
acquisition of the
Predecessor............ 76,776 1,000 781,104 1,000 14,060,000 -- -- 14,062,000
Issuance of common stock
warrants in connection
with the Credit
Agreement.............. -- -- -- -- 150,000 -- -- 150,000
Unallocated purchase
price.................. -- -- -- -- -- (18,467,000) -- (18,467,000)
Net loss................ -- -- -- -- -- -- (59,000) (59,000)
------ ------ ------- ------ ----------- ------------ ---------- ------------
Balance at December 29,
1996................... 76,776 1,000 781,104 1,000 14,210,000 (18,467,000) (59,000) (4,314,000)
Net income.............. -- -- -- -- -- -- 1,318,000 1,318,000
------ ------ ------- ------ ----------- ------------ ---------- ------------
Balance at December 28,
1997................... 76,776 $1,000 781,104 $1,000 $14,210,000 $(18,467,000) $1,259,000 $ (2,996,000)
====== ====== ======= ====== =========== ============ ========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
68
<PAGE>
PIROD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from July 24,
Year ended 1996 (inception) to
December 28, 1997 December 29, 1996
----------------- --------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)..................... $ 1,318,000 $ (59,000)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization....... 2,972,000 975,000
Purchased inventory step-up......... -- 909,000
Loss on sale of property, plant and
equipment.......................... 8,000 --
Extraordinary loss on redemption of
long-term debt, net of income
taxes.............................. 82,000 --
Deferred income taxes............... 320,000 (22,000)
Increase (decrease) in cash
resulting from changes in operating
assets and liabilities, net of
acquired amounts:
Accounts receivable, trade........ (30,000) (1,142,000)
Inventories....................... (548,000) (450,000)
Prepaid expenses and other assets. 166,000 (217,000)
Accounts payable and accrued
expenses......................... (221,000) 1,075,000
Customer deposits................. (1,389,000) (517,000)
----------- ------------
Net cash provided by operating
activities............................. 2,678,000 552,000
----------- ------------
Cash flows from investing activities:
Acquisition of the Predecessor:
Consideration paid.................. -- (49,450,000)
Purchase price adjustment........... 1,655,000 --
Purchases of property, plant and
equipment............................ (1,819,000) (912,000)
Proceeds from sale of property, plant
and equipment........................ 83,000 --
----------- ------------
Net cash used in investing activities... (81,000) (50,362,000)
----------- ------------
Cash flows from financing activities:
Proceeds from issuance of long-term
debt................................. 1,000,000 46,841,000
Repayment of long-term debt........... (4,000,000) --
Proceeds from issuance of common
stock................................ -- 7,734,000
Payment of financing costs............ (20,000) (2,180,000)
Principal repayments under capital
lease obligations.................... (76,000) (43,000)
----------- ------------
Net cash provided by (used in) financing
activities............................. (3,096,000) 52,352,000
----------- ------------
Net increase (decrease) in cash and cash
equivalents............................ (499,000) 2,542,000
Cash and cash equivalents, beginning of
period................................. 2,542,000 --
----------- ------------
Cash and cash equivalents, end of
period................................. $ 2,043,000 $ 2,542,000
=========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
69
<PAGE>
PIROD HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Description of the Company
PiRod Holdings, Inc. ("PiRod") is engaged in the engineering, manufacturing
and selling of communication towers to customers located primarily in the
United States.
PiRod was incorporated as a Delaware corporation on July 24, 1996 and had no
substantive operations for the period July 24, 1996 through August 27, 1996. On
August 28, 1996, PiRod acquired, through its wholly-owned subsidiary PiRod
Acquisition, Inc., substantially all of the operating assets and liabilities of
PiRod, Inc. (the "Predecessor") in a purchase transaction (the "Acquisition").
The purchase price of $58,945,000 consisted of cash consideration of
$47,020,000, a senior subordinated note valued at $5,597,000 and common stock
and warrants valued at $6,328,000. The cash portion of the purchase price was
financed primarily through the borrowings described in Note 7.
In connection with the Acquisition, the Predecessor acquired an aggregate
ownership interest in PiRod of approximately 42.0%. As a result, the
acquisition was accounted for under the purchase method of accounting in
accordance with Issue No. 88-16 of the Emerging Issues Task Force of the
Financial Accounting Standards Board, "Basis in Leveraged Buyout Transactions."
Accordingly, approximately 58.0% of the purchase price was allocated to the
assets and liabilities acquired at their respective fair values, with the
remainder allocated at the Predecessor's historical book value as of the date
of acquisition. The application of the purchase method resulted in an excess of
aggregate purchase price (including direct acquisition costs of $775,000) over
the allocated value of the net assets acquired ("goodwill") of $1,284,000 and
an allocation of the excess aggregate purchase price over historical carryover
basis of the Predecessor ("unallocated purchase price") of $18,467,000.
Accounts receivable, other, of $1,655,000 at December 29, 1996 represents the
agreed-upon purchase price adjustment required under the terms of the Asset
Purchase Agreement between PiRod and the Predecessor.
Subsequent to the Acquisition, the Predecessor changed its name to PH, Inc.
and PiRod Acquisition, Inc. changed its name to PiRod, Inc.
2. Significant Accounting Policies
The following summarizes the significant accounting policies applied in the
preparation of the accompanying consolidated financial statements.
Principles of Consolidation--The consolidated financial statements include
financial statements of PiRod and its wholly-owned subsidiary, PiRod, Inc. All
significant intercompany accounts and transactions have been eliminated.
Fiscal Year--PiRod's fiscal year is based on a 52/53 week operating cycle,
which ends on the Sunday closest to December 31.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents--PiRod considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents.
Substantially all of PiRod's cash is held by one bank at December 28, 1997.
PiRod does not believe that as a result of this concentration it is subject to
any unusual credit risk beyond the normal credit risk associated with
commercial banking relationships.
70
<PAGE>
PIROD HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Accounts Receivable and Revenue Recognition--PiRod recognizes revenue in
accordance with the terms of customers orders, which occurs upon the shipment
of goods. To minimize credit risk associated with its accounts receivable,
credit evaluations of customers' financial condition are performed on an
ongoing basis and, in the case of certain customers, cash deposits are
required. In addition, PiRod maintains reserves for potential credit losses
and, historically, such losses have not exceeded management's expectations.
During the year ended December 28, 1997 and the period ended December 29,
1996, sales to one customer in the communications industry approximated 12.0%
and 10.5%, respectively, of net sales. At December 28, 1997, accounts
receivable due from this customer and three other customers in the
communications industry comprised approximately 51.0% of trade accounts
receivable.
Inventories--Inventories are stated at the lower of cost, which includes
materials, labor and overhead, or market. Cost is determined using the first-
in, first-out method.
Property, Plant and Equipment--Property, plant and equipment are stated at
cost less accumulated depreciation. Depreciation is provided for over the
estimated useful lives of the assets using the straight-line method. Equipment
under capital lease and leasehold improvements are amortized over the lesser of
the lease term or the estimated useful lives of the assets. Repair and
maintenance expenditures are charged to expense as incurred.
Goodwill and Other Intangible Assets--Goodwill and other intangible assets
are being amortized over the estimated period benefitted, using the straight-
line method.
Deferred Financing Costs--PiRod has deferred certain debt issuance costs
incurred in connection with the issuance of the debt instruments described in
Note 7. These costs are being amortized over the term of the debt using the
bonds outstanding method. At December 28, 1997 and December 29, 1996, deferred
financing costs are net of accumulated amortization of $473,000 and $120,000,
respectively.
Accounting for the Impairment of Long-Lived Assets--PiRod periodically
evaluates its long-lived assets whenever events or changes in circumstances
indicate that the carrying amount of such assets may not be recoverable. Upon
the occurrence of such an event or change in circumstances, PiRod evaluates
potential impairment based on estimated future undiscounted cash flows. In the
event that future undiscounted cash flows are less than the carrying amount of
such assets, an impairment loss is recognized for the difference between the
estimated fair value and the carrying amount of the assets.
Income Taxes--PiRod accounts for income taxes in accordance with Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). SFAS 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the financial statement carrying
amounts and the tax basis of assets and liabilities. Deferred tax expense
represents the change in the net deferred tax asset or liability balances.
Fair Value of Financial Instruments--The fair value of PiRod's financial
instruments, including cash and equivalents, accounts receivable, accounts
payable, accrued liabilities and long-term debt, approximate book value at
December 28, 1997.
Accounting for Stock-Based Compensation--Although stock-based compensation
plans are not presently significant, PiRod has elected to use the intrinsic
value method of accounting prescribed by Accounting
71
<PAGE>
PIROD HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Principles Board Opinion No. 25 ("APB 25") and its Interpretations for
financial statement purposes and has elected to adopt the fair value method
prescribed by Statement of Financial Accounting Standards No. 123 ("SFAS 123")
for disclosure purposes only.
Reclassifications--Certain prior period amounts have been reclassified to
conform to the current year financial statement presentation. The
reclassifications had no impact on net loss for the period ended December 29,
1996.
3. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
December 28, December 29,
1997 1996
------------ ------------
<S> <C> <C>
Raw materials................................... $1,659,000 $1,532,000
Purchased parts................................. 1,782,000 1,645,000
Work in process................................. 547,000 876,000
Finished goods.................................. 3,755,000 3,142,000
---------- ----------
$7,743,000 $7,195,000
========== ==========
</TABLE>
Under the purchase method of accounting, PiRod's inventories were written up
by $909,000 to fair value at the date of the Acquisition. The total amount of
$909,000 was charged to cost of sales during the period ended December 29,
1996.
72
<PAGE>
PIROD HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
4. Property, Plant and Equipment
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
Estimated
useful
life December 28, December 29,
(years) 1997 1996
--------- ------------ ------------
<S> <C> <C> <C>
Land and land improvements........... 15 $ 842,000 $ 691,000
Buildings and leasehold improvements. 7-40 3,409,000 2,186,000
Machinery and equipment.............. 3-7 3,278,000 2,694,000
Office equipment..................... 3-7 900,000 745,000
Construction-in-progress............. 80,000 486,000
---------- ----------
8,509,000 6,802,000
Accumulated depreciation and
amortization........................ (960,000) (232,000)
---------- ----------
$7,549,000 $6,570,000
========== ==========
</TABLE>
At December 28, 1997 and December 29, 1996, the cost of assets under capital
lease was approximately $284,000 and the related accumulated amortization was
approximately $138,000 and $44,000, respectively. Amortization expense related
to assets under capital lease was approximately $94,000 and $44,000 during the
year ended December 28, 1997 and the period ended December 29, 1996,
respectively. Depreciation expense on owned property, plant and equipment was
approximately $749,000 and $188,000 during the year ended December 28, 1997 and
the period ended December 29, 1996, respectively.
5. Goodwill and Other Intangible Assets
Goodwill and other intangible assets consists of the following:
<TABLE>
<CAPTION>
Estimated
useful
life December 28, December 29,
(years) 1997 1996
--------- ------------ ------------
<S> <C> <C> <C>
Goodwill and tradename............... 25 $ 5,620,000 $ 5,620,000
Customer relationships............... 19 15,190,000 15,190,000
Proprietary software and database.... 7 1,775,000 1,775,000
Supplier relationships............... 5 1,513,000 1,513,000
Integrated workforce................. 12 757,000 757,000
Customer contract.................... 3 524,000 524,000
----------- -----------
25,379,000 25,379,000
Accumulated amortization............. (2,424,000) (606,000)
----------- -----------
$22,955,000 $24,773,000
=========== ===========
</TABLE>
6. Accrued Expenses
Accrued expenses consists of the following:
<TABLE>
<CAPTION>
December 28, December 29,
1997 1996
------------ ------------
<S> <C> <C>
Employee-related................................ $2,346,000 $2,057,000
Interest........................................ 510,000 548,000
Customer rebates................................ 403,000 281,000
Sales taxes..................................... 313,000 149,000
Income taxes.................................... 223,000 --
Other........................................... 349,000 326,000
---------- ----------
$4,144,000 $3,361,000
========== ==========
</TABLE>
73
<PAGE>
PIROD HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
7. Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 28, December 29,
1997 1996
------------ ------------
<S> <C> <C>
Series A Term Loan............................. $24,125,000 $25,000,000
Series B Term Loan............................. 6,475,000 7,000,000
Series C Term Loan, net of unamortized discount
of $125,000 and $144,000, respectively........ 7,275,000 7,856,000
Senior subordinated notes, net of unamortized
discount of $248,000 and $306,000,
respectively.................................. 11,626,000 12,450,000
Obligations under capital leases (Note 13)..... 165,000 241,000
----------- -----------
49,666,000 52,547,000
Current portion of long-term debt.............. (2,000,000) --
----------- -----------
$47,666,000 $52,547,000
=========== ===========
</TABLE>
Credit Agreement
In connection with the Acquisition, PiRod entered into a credit agreement
(the "Credit Agreement") with a lender (the "Lender"). Borrowings under the
Credit Agreement, consisting of the Revolving Credit Facility (the "Revolver"),
the Series A Term Loan, Series B Term Loan and the Series C Term Loan
(collectively, the "Term Loans"), are secured by a perfected first priority
security interest in the assets of PiRod. Under the terms of the Credit
Agreement, PiRod must comply with certain restrictive covenants, which set
maximum amounts of annual capital expenditures and include the requirement that
PiRod maintain minimum amounts of profitability, solvency, and liquidity, as
defined in the Credit Agreement. In addition, the Credit Agreement restricts
PiRod from making certain payments, including dividends to its stockholders.
Revolving Credit Facility--The Credit Agreement, which expires on August 31,
2004, provides for borrowings under the Revolver of up to $8,000,000, subject
to a borrowing base calculated on a formula of eligible accounts receivable and
inventory. Advances under the Revolver bear interest, at PiRod's option, at
either (i) 3.0% plus LIBOR or (ii) 1.5% plus the Prime rate. In addition, PiRod
is required to pay a monthly fee of 0.5% per annum on the average unused
commitment under the Revolver. At December 28, 1997, there were no borrowings
under the Revolver.
Also under the Revolver, the Lender has agreed to guarantee up to $500,000
of standby letters of credit issued by other banks. PiRod is required to pay a
fee of 2.0% per annum on the average guaranteed letter of credit balance. At
December 28, 1997, there were no guaranteed standby letters of credit
outstanding.
Series A Term Loan--Under the Series A Term Loan, PiRod was advanced
$25,000,000 on August 28, 1996. Advances under the Series A Term Loan bear
interest, at PiRod's option, at either (i) 3.25% plus LIBOR or (ii) 1.75% plus
the Prime rate. Semi-annual payments of varying amounts are due beginning on
February 29, 2000 and through the maturity date of August 31, 2003. In May
1997, PiRod borrowed an additional $1,000,000 to repay a portion of the
outstanding senior subordinated notes.
Series B Term Loan--Under the Series B Term Loan, PiRod was advanced
$7,000,000 on August 28, 1996. Advances under the Series B Term Loan bear
interest, at PiRod's option, at either (i) 3.50% plus LIBOR or (ii) 2.0% plus
the Prime rate. Semi-annual payments of varying amounts are due beginning on
February 28, 2003 and through the maturity date of August 31, 2004.
74
<PAGE>
PIROD HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Series C Term Loan--Under the Series C Term Loan, PiRod was advanced
$8,000,000 on August 28, 1996, Advances under the Series C Term Loan bear
interest, at PiRod's option, at either (i) 3.75% plus LIBOR or (ii) 2.25% plus
the Prime rate. The entire principal amount is due on August 31, 2004.
In connection with obtaining the Series C Term Loan, the Lender received
warrants to purchase 20,028 and 2,225 shares of Class A Common Stock and Class
L Common Stock, respectively (Note 8). The value ascribed to the warrants of
approximately $150,000 was recorded as a discount from the face value of the
debt and is being amortized using the straight-line method over the life of the
Series C Term Loan.
Senior Subordinated Notes
On August 28, 1996, PiRod issued $7,015,000 principal amount of 12.0% Senior
Subordinated Notes ("Senior Notes") to the majority stockholder for net
proceeds of $6,841,000, which were used primarily to fund the Acquisition. Also
in connection with the Acquisition, PiRod issued a 12.0% Senior Note to the
Predecessor valued at $5,597,000 (principal amount $5,740,000) as a portion of
the purchase price consideration. The Senior Notes are unsecured and bear
interest at 12.0%, payable each April 30 and October 31 through the maturity
date of August 29, 2005. The difference between the principal amount of the
Senior Notes and the proceeds or value received by PiRod has been recorded as a
discount from the face value of the debt and is being amortized over the life
of the Senior Notes using the straight-line method.
In May 1997, PiRod prepaid certain Senior Notes with an original principal
amount of $1,000,000. This prepayment was made at a cost of $1,120,000
(including prepayment penalties), $1,000,000 of which was paid in cash and
$120,000 of which was repaid via the issuance of additional Senior Notes. These
Senior Notes contain the same terms as the Senior Notes that were prepaid, with
the exception that they bear interest at 8.0% which is payable "in-kind"
through the semi-annual issuance of additional Senior Notes. The prepayment of
the Senior Notes resulted in an extraordinary loss of approximately $82,000,
net of the related income tax benefit.
The terms of the Senior Notes require PiRod to comply with certain
restrictive covenants, which set maximum amounts of annual capital expenditures
and include the requirement that PiRod maintain minimum amounts of
profitability, solvency, and liquidity, as defined in the Credit Agreement
(although generally less restrictive). In addition, the Senior Notes restrict
PiRod from making certain payments, including dividends to its stockholders.
The Senior Notes are subordinated to the prior payment and satisfaction of
indebtedness outstanding under the Credit Agreement.
Future Principal Payments
On an annual basis, PiRod must pay down the principal balances outstanding
under the Credit Agreement in an amount equal to 70.0% of PiRod's Excess Cash
Flow, as that term is defined in the Credit Agreement. At December 28, 1997,
PiRod has classified $2,000,000 of the principal amounts outstanding under the
Credit Agreement as current, representing the principal repayments expected to
be made in 1998 under this provision of the Credit Agreement.
75
<PAGE>
PIROD HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In the event of certain occurrences defined in the related agreements,
including mergers, public offerings, certain asset sales and changes in
control, PiRod may be obligated to repay the Revolver, the Term Loans and the
Senior Notes with the net cash proceeds of such transactions. In the case of
the Term Loans, the redemption prices range from 102.0% to 103.5%, plus accrued
and unpaid interest, if the repayment occurs prior to August 31, 1999. There is
no prepayment premium for mandatory repayment of the Term Loans after August
31, 1999. In the case of the Senior Notes, the redemption prices range from
110.7% to 101.3%, plus accrued and unpaid interest, if the repayment occurs
prior to August 28, 2004. There is no prepayment premium for mandatory
repayment of the Senior Notes after August 28, 2004.
As of December 28, 1997, scheduled future principal payments of long-term
debt (excluding the Revolver and obligations under capital leases) are as
follows:
<TABLE>
<S> <C>
1998.......................................................... $ 2,000,000
1999.......................................................... --
2000.......................................................... 3,440,000
2001.......................................................... 5,580,000
2002.......................................................... 7,020,000
Thereafter.................................................... 31,461,000
-----------
$49,501,000
===========
</TABLE>
8. Stockholders' Deficit
Common Stock
PiRod has authorized 19,910,000 shares of Class A Common Stock (the "Class A
Common") and 90,000 shares of Class L Common Stock (the "Class L Common"), each
with a par value of $0.001 per share.
On August 28, 1996, PiRod received $7,734,000 in proceeds from the issuance
of 429,607 shares of Class A Common, 42,227 shares of Class L Common and
warrants to purchase 5,507 shares of Class L Common. Also on August 28, 1996,
in connection with the Acquisition, PiRod issued 351,497 shares of Class A
Common, 34,549 shares of Class L Common and warrants to purchase 4,506 shares
of Class L Common, valued at approximately $6,328,000.
Conversion--Upon a vote of the Board of Directors at the time of or after an
initial public offering, shares of Class L Common convert automatically to
Class A Common. Each share of Class L Common is convertible into shares of
Class A Common at a rate equivalent to one plus the total of (i) $162 and (ii)
an internal rate of return of 12% per annum compounded quarterly, divided by
the public offering price of the Class A Common. The conversion rate is to be
adjusted for any stock split, stock dividend or other similar event.
Voting Rights--Holders of Class A Common are entitled to one vote per share.
Holders of Class L Common are entitled to vote only upon conversion of the
Class L Common to Class A Common.
Liquidation Preference--The Class L Common retains a liquidation preference
over the Class A Common at a rate equal to $162 per share plus an internal rate
of return of 12% per annum compounded quarterly. Subsequent to satisfying the
liquidation preference of the Class L Common, distributions are to be made
ratably among the holders of Class A and Class L Common.
76
<PAGE>
PIROD HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Common Stock Warrants
In connection with the Series C Term Loan, warrants to purchase 20,028 and
2,225 shares of Class A Common and Class L Common, respectively, were issued to
the Lender (Note 7). Each of the warrants have an aggregate exercise price of
$100 with such share price subject to certain anti-dilution protection
adjustments as provided for in the warrant agreements. The warrants were
exercisable upon issuance and expire August 31, 2006.
In connection with the capitalization of PiRod and the Acquisition, PiRod
issued warrants to purchase 10,013 shares of Class L Common at an exercise
price of $162 per share (subject to certain anti-dilution protection
adjustments). The warrants were exercisable upon issuance and expire August 31,
2006.
Stock Option Plan
During 1997, PiRod's Board of Directors approved the 1997 Stock Option Plan
(the "Plan") which provides for the granting of stock options to those
employees, consultants and advisors who are in a position to make significant
contributions to PiRod. The Plan allows for a maximum of 100,000 shares of
Class A Common to be issued. Options granted under the Plan must have exercise
prices not less than the fair value of the stock on the date of grant or less
than 110% of the fair value in the case of a shareholder owning ten percent or
more of PiRod. Options granted under the Plan are exercisable over periods
determined by the Board of Directors, not to exceed ten years from the date of
grant or five years in the case of a shareholder owning ten percent or more of
PiRod.
During the year ended December 28, 1997, PiRod issued options to purchase
12,250 shares of Class A Common at an exercise price of $2.00 per share. The
options vest over four years and, as of December 28, 1997, approximately 2,450
of these shares are exercisable. During the year ended December 28, 1997, there
were no options exercised or canceled.
As discussed in Note 2, PiRod applies APB 25 and its Interpretations in
accounting for the aforementioned option plan. Accordingly, no compensation
cost has been recognized for this plan. Had compensation cost for PiRod's
option plan been determined based on the fair value method, as defined in SFAS
123, net income would not have been materially reduced.
Common Stock Restrictions
PiRod's stockholders have entered into an agreement which restricts the
transfer or sale of shares by all investors unless certain conditions are met.
Generally, these restrictions lapse upon the closing of a qualified public
offering of PiRod's common stock or a change in control, as those terms are
defined in the agreement.
9. Income Taxes
The income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>
Year ended Period from July 24,
December 28, 1996 (inception) to
1997 December 29, 1996
------------ --------------------
<S> <C> <C>
Current:
Federal............................... $500,000 $ --
State................................. 140,000 --
-------- --------
Total current....................... 640,000 --
-------- --------
Deferred:
Federal............................... 255,000 (18,000)
State................................. 65,000 (4,000)
-------- --------
Total deferred...................... 320,000 (22,000)
-------- --------
$960,000 $(22,000)
======== ========
</TABLE>
77
<PAGE>
PIROD HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The income tax expense (benefit) differs from the amount computed by
applying the statutory federal income tax rate of 34% to income (loss) before
income taxes as follows:
<TABLE>
<CAPTION>
Year ended Period from July 24,
December 28, 1996 (inception) to
1997 December 29, 1996
------------ --------------------
<S> <C> <C>
Income tax expense (benefit) at
statutory rate........................ $802,000 $(28,000)
State taxes, net of federal benefit.... 76,000 (3,000)
Amortization of intangible assets and
other permanent differences........... 82,000 9,000
-------- --------
$960,000 $(22,000)
======== ========
</TABLE>
The components of deferred income taxes are as follows:
<TABLE>
<CAPTION>
December 28, December 29,
1997 1996
------------ ------------
<S> <C> <C>
Deferred tax assets
Accounts receivable................................. $ 132,000 $ 108,000
Inventories......................................... 148,000 103,000
Property, plant and equipment....................... -- 214,000
Intangible assets................................... 4,288,000 4,335,000
Accrued expenses.................................... 146,000 161,000
Net operating loss carryforwards.................... -- 122,000
---------- ----------
Deferred tax assets............................... 4,714,000 5,043,000
---------- ----------
Deferred tax liabilities
Property, plant and equipment....................... (12,000) --
Long term debt...................................... (158,000) (179,000)
---------- ----------
Deferred tax liabilities.......................... (170,000) (179,000)
Deferred tax asset valuation allowance................ (3,000,000) (3,000,000)
---------- ----------
Net deferred tax assets........................... $1,544,000 $1,864,000
========== ==========
</TABLE>
Realization of PiRod's net deferred tax assets is dependent upon generating
sufficient taxable income in the years in which the temporary differences
reverse. SFAS 109 requires that deferred tax assets be reduced by a valuation
allowance if it is more likely than not that some portion or all of the
deferred tax assets will not be realized. Management has provided a valuation
allowance in light of the uncertainty caused by the recent changes impacting
the business including the incurrence of substantial debt, increased
competition and other factors which could result in the failure to achieve
forecasted taxable income.
10. Profit Sharing Plan
PiRod provides certain benefits to its employees through a profit sharing
plan established under Section 401(a) of the Internal Revenue Code (the
"Code"). PiRod contributes 15.0% of the respective employee's annual gross
wages to the plan, subject to limitations under the Code. PiRod's expense
related to this plan was approximately $1,223,000 and $230,000 during the year
ended December 28, 1997 and the period ended December 29, 1996, respectively.
11. Related Party Transactions
During the year ended December 28, 1997 and the period ended December 29,
1996, interest expense related to the Senior Notes approximated $1,463,000 and
$519,000 respectively.
78
<PAGE>
PIROD HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
PiRod has entered into an agreement with a majority stockholder who provides
management and advisory services to PiRod. During the year ended December 28,
1997 and the period ended December 29, 1996, fees related to this agreement
approximated $296,000 and $107,000, respectively.
PiRod leases buildings under non-cancelable operating leases from a related
party (Note 13). During the year ended December 28, 1997 and the period ended
December 29, 1996, rent expenses under these agreements approximated $219,000
and $62,000, respectively.
12. Supplemental Disclosure of Cash Flow Information
Cash paid for interest totaled $5,101,000 and $1,221,000 during the year
ended December 28, 1997 and the period ended December 29, 1996, respectively.
Cash paid for income taxes totaled $355,000 and $0 during the year ended
December 28, 1997 and the period ended December 29, 1996, respectively.
13. Commitments and Contingencies
PiRod leases certain equipment and buildings under non-cancelable operating
and capital leases. Generally, these lease agreements contain renewal
provisions for additional terms of varying length and require PiRod to pay all
executory costs. As of December 28, 1997, future minimum payments under these
lease agreements are as follows:
<TABLE>
<CAPTION>
Operating Capital
--------- --------
<S> <C> <C>
1998.................................................. $314,000 $ 94,000
1999.................................................. 291,000 40,000
2000.................................................. 264,000 40,000
2001.................................................. 129,000 17,000
2002.................................................. -- 11,000
Thereafter............................................ -- 6,000
-------- --------
$998,000 $208,000
========
Amount representing interest.......................... (43,000)
--------
Obligation under capital leases (Note 7).............. $165,000
========
</TABLE>
Rent expense was approximately $320,000 and $234,000 during the year ended
December 28, 1997 and the period ended December 29, 1996, respectively.
14. Events (Unaudited) Subsequent to Date of Independent Accountants' Report
During 1998, PiRod failed to remain in compliance with certain of the
financial covenants included in the Credit Agreement and the Senior Notes.
PiRod has requested a modification of the respective financial covenants from
the lender; however, such modification has not been received. As a result of
these defaults, the lenders can at any time elect to declare all outstanding
amounts of principal and accrued interest due and payable. Under the terms of
the agreement and plan of merger discussed below, all principal and interest
outstanding under the Credit Agreement and the Senior Notes will be repaid at
closing.
On December 22, 1998, PiRod entered into an agreement and plan of merger
with ROHN Industries, Inc. ("ROHN"). In connection with this agreement, PiRod
will be merged with and into ROHN, with ROHN continuing as the surviving
corporation of the merger. Consummation of the merger is subject to various
conditions, including, but not limited to, approval by the shareholders of
PiRod and ROHN. Each of PiRod's Class A shares shall be converted into the
right to receive 3.7282 shares of ROHN common stock and each of PiRod's Class L
shares shall be converted into the right to receive 61.6859 shares of ROHN
common stock.
79
<PAGE>
PIROD, INC.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
August 27, December
1996 31, 1995
ASSETS ----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 361,000 $ 218,000
Accounts receivable, trade, net of allowance for
doubtful accounts of $71,000 and $66,500 in 1996
and 1995, respectively............................ 7,535,000 3,724,000
Inventories........................................ 6,745,000 6,560,000
Prepaid expenses and other assets.................. 118,000 182,000
----------- -----------
Total current assets............................. 14,759,000 10,684,000
Property, plant and equipment, net................... 4,554,000 3,352,000
Goodwill, net........................................ 2,755,000 --
Deferred financing costs, net........................ 2,000 3,000
----------- -----------
$22,070,000 $14,039,000
=========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Current portion of long-term debt.................. $ 151,000 $ 151,000
Revolving credit facility.......................... 3,815,000 2,343,000
Accounts payable................................... 2,130,000 933,000
Customer deposits.................................. 2,327,000 377,000
Accrued expenses................................... 2,250,000 2,192,000
----------- -----------
Total current liabilities........................ 10,673,000 5,996,000
Long-term debt....................................... 1,106,000 1,206,000
----------- -----------
Total liabilities................................ 11,779,000 7,202,000
----------- -----------
Commitments and contingencies (Note 13)
Stockholders' equity:
Common stock, no par value, 10,000,000 shares
authorized, 40,000 issued and outstanding......... 6,460,000 2,760,000
Retained earnings.................................. 4,900,000 5,732,000
Notes receivable from shareholders................. (1,069,000) (1,655,000)
----------- -----------
Total stockholders' equity....................... 10,291,000 6,837,000
----------- -----------
$22,070,000 $14,039,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
80
<PAGE>
PIROD, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Period from
January 1, 1996 Year ended
to August 27, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Net sales................................. $30,274,000 $33,437,000
Cost of sales............................. 21,428,000 23,179,000
----------- -----------
Gross profit.............................. 8,846,000 10,258,000
Selling, general and administrative
expenses................................. 4,494,000 4,491,000
----------- -----------
Income from operations.................... 4,352,000 5,767,000
Other expense (income):
Interest income......................... (68,000) (137,000)
Interest expense........................ 297,000 397,000
----------- -----------
Income before income taxes................ 4,123,000 5,507,000
Income tax expense........................ 63,000 22,000
----------- -----------
Net income................................ $ 4,060,000 $ 5,485,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
81
<PAGE>
PIROD, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Total
----------------- Retained Notes Receivable Stockholders'
Shares Value Earnings From Shareholders Equity
------ ---------- ---------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at January 1,
1995................... 40,000 $2,760,000 $5,074,000 $(2,006,000) $ 5,828,000
Payments received on
shareholder notes...... 351,000 351,000
Dividends declared...... -- -- (4,827,000) (4,827,000)
Net income.............. -- -- 5,485,000 -- 5,485,000
------ ---------- ---------- ----------- -----------
Balance at December 31,
1995................... 40,000 2,760,000 5,732,000 (1,655,000) 6,837,000
Issuance of common stock
in connection with the
acquisition of
Plymouth............... 2,500 3,700,000 -- -- 3,700,000
Payments received on
shareholder notes...... -- -- -- 586,000 586,000
Dividends declared...... -- -- (4,892,000) -- (4,892,000)
Net income.............. -- -- 4,060,000 -- 4,060,000
------ ---------- ---------- ----------- -----------
Balance at August 27,
1996................... 42,500 $6,460,000 $4,900,000 $(1,069,000) $10,291,000
====== ========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
82
<PAGE>
PIROD, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Period from
January 1, 1996 Year ended
to August 27, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income.............................. $4,060,000 $5,485,000
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization......... 663,000 410,000
(Gain) loss on sale of property, plant
and equipment........................ (2,000) 10,000
Increase (decrease) in cash resulting
from changes in operating assets and
liabilities, net of acquired amounts:
Accounts receivable................. (3,779,000) 983,000
Inventories......................... (185,000) (2,438,000)
Prepaid expenses and other assets... 64,000 4,000
Accounts payable and accrued
expenses........................... 1,718,000 (240,000)
Customer deposits................... 1,951,000 120,000
---------- ----------
Net cash provided by operating activities. 4,490,000 4,334,000
---------- ----------
Cash flows from investing activities:
Purchases of property, plant and
equipment.............................. (919,000) (1,128,000)
Proceeds from sale of property, plant
and equipment.......................... 2,000 2,000
---------- ----------
Net cash used in investing activities..... (917,000) (1,126,000)
---------- ----------
Cash flows from financing activities:
Proceeds from issuance of long-term
debt................................... -- 564,000
Net borrowings on revolving credit
facility............................... 1,472,000 761,000
Principal payments on long-term debt.... (101,000) (151,000)
Dividends paid on common stock.......... (5,387,000) (4,656,000)
Payments received on shareholder notes
receivable............................. 586,000 351,000
---------- ----------
Net cash used in financing activities..... (3,430,000) (3,131,000)
---------- ----------
Net increase in cash and equivalents...... 143,000 77,000
Cash and cash equivalents, beginning of
period................................... 218,000 141,000
---------- ----------
Cash and cash equivalents, end of period.. $ 361,000 $ 218,000
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
83
<PAGE>
PIROD, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
1. Description of the Predecessor
PiRod, Inc. (the "Predecessor") designs, engineers, manufactures, sells, and
installs communication towers to customers primarily in the United States.
2. Significant Accounting Policies
The following summarizes the significant accounting policies applied in the
preparation of the Predecessor's financial statements.
Unaudited Financial Information--The accompanying financial statements are
unaudited; however, in the opinion of management, such financial statements
contain all of the necessary adjustments to fairly present the financial
position, results of operations and cash flows of the Predecessor for the
periods presented.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates.
Cash and Cash Equivalents--The Predecessor considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents. Substantially all of the Predecessor's cash is held by one bank on
August 27, 1996. The Predecessor does not believe that as a result of this
concentration it is subject to any unusual credit risk beyond the normal credit
risk associated with commercial banking relationships.
Accounts Receivable and Revenue Recognition--The Predecessor recognizes
revenue in accordance with the terms of customers orders, which occurs upon the
shipment of goods. To minimize credit risk associated with its accounts
receivable, credit evaluations of customers' financial condition are performed
on an ongoing basis and, in the case of certain customers, cash deposits are
required. In addition, the Predecessor maintains reserves for potential credit
losses and, historically, such losses have not exceeded management's
expectations.
During the period ended August 27, 1996 sales to one customer in the
communications industry approximated 14% of net sales. There were no customers
during the year ended December 31, 1995 that exceeded 10% of net sales.
Inventories--Inventories are stated at the lower of cost, which includes
materials, labor and overhead, or market. Cost is determined by the first-in
first-out method.
Property, Plant and Equipment--Property, plant and equipment are stated at
cost less accumulated depreciation. Depreciation is provided for over the
estimated useful lives of the assets using the straight-line and declining
balance methods. Leasehold improvements are amortized over the lesser of the
lease terms or the estimated useful lives of the assets. Repair and maintenance
expenditures are charged to expense as incurred.
Goodwill--Goodwill is being amortized over the estimated period benefited of
10 years, using the straight-line method.
Deferred Financing Costs--The Predecessor has deferred certain debt issuance
costs incurred in connection with the debt instrument described in Note 8.
These costs are being amortized over the term of the debt agreement using the
straight-line method. At August 27, 1996 and December 31, 1995, deferred
financing costs are net of accumulated amortization of approximately $1,000 for
each of the periods.
Income Taxes--The Predecessor has elected to be taxed as a "small business
corporation" under Section 1372 of the Internal Revenue Code ("Subchapter S").
Under this election, the Predecessor's net income or loss is taxed directly to
the stockholders and is reported on their individual income tax returns. The
84
<PAGE>
PIROD, INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(Unaudited)
Predecessor has generated income in certain states that do not recognize
subchapter S elections and, as a result, taxes on the income generated in these
states have been provided for by the Predecessor.
Fair Value of Financial Instruments--The fair value of the Predecessor's
financial instruments, including cash and equivalents, accounts receivable,
accounts payable, accrued liabilities and long-term debt, approximate book
value at August 27, 1996 and December 31, 1995.
3. Acquisition
On January 1, 1996, the Predecessor acquired all of the outstanding stock of
Plymouth White Metal, Inc. ("Plymouth") in exchange for 2,500 shares of the
Predecessor's common stock valued at approximately $3,700,000. Plymouth was
engaged in the machining and fabrication of steel, and was a major supplier to
the Predecessor.
The transaction was accounted for under the purchase method of accounting.
Accordingly, the purchase price was allocated to the assets acquired and the
liabilities assumed based on their estimated fair market value at the date of
acquisition. The excess of the total purchase price over the estimated fair
market value of the net assets acquired was approximately $2,952,000 and has
been recorded as goodwill. The operating results of Plymouth have been included
in the Predecessor's results from the date of acquisition.
If the acquisition of Plymouth had occurred on January 1, 1995, the
unaudited pro forma net sales and net income of the Predecessor would have been
$33,437,000 and $6,053,000, respectively, for the year ended December 31, 1995.
The unaudited pro forma amounts have been calculated based upon the actual
historical results of the Predecessor, after giving effect to certain
adjustments, including depreciation of property, plant and equipment,
amortization of goodwill and the elimination of intercompany transactions. The
unaudited pro forma results of operations are not necessarily indicative of the
results that actually would have been obtained if the operations were combined
during the periods presented, and is not intended to be a projection of future
results or trends.
4. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
August 27, December 31,
1996 1995
---------- ------------
<S> <C> <C>
Raw materials..................................... $1,674,000 $1,167,000
Purchased parts................................... 1,426,000 1,072,000
Work in process................................... 710,000 550,000
Finished goods.................................... 2,935,000 3,771,000
---------- ----------
$6,745,000 $6,560,000
========== ==========
</TABLE>
85
<PAGE>
PIROD, INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(Unaudited)
5. Property, Plant and Equipment
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
Estimated
useful life August 27, December 31,
(years) 1996 1995
----------- ----------- ------------
<S> <C> <C> <C>
Land and land improvements......... -- $ 583,000 $ 432,000
Buildings and leasehold
improvements...................... 5-39 3,113,000 2,870,000
Machinery and equipment............ 5-8 2,834,000 1,078,000
Office equipment................... 3-10 1,140,000 856,000
Vehicles........................... 3-5 142,000 64,000
----------- -----------
7,812,000 5,300,000
Accumulated depreciation and
amortization...................... (3,258,000) (1,948,000)
----------- -----------
$ 4,554,000 $ 3,352,000
=========== ===========
</TABLE>
6. Revolving Credit Facility
The Predecessor's revolving credit facility (the "revolver") with a bank,
which expires on August 31, 1996, provides for borrowings of up to $7,500,000,
subject to a borrowing base calculated on a formula of eligible accounts
receivable and inventory. As of August 27, 1996, interest on the outstanding
amount is charged at the bank's prime rate (8.25%) and is payable monthly. The
revolver is secured by the Predecessor's accounts receivable and inventory.
7. Accrued Expenses
Accrued expenses consists of the following:
<TABLE>
<CAPTION>
August 27, December 31,
1996 1995
---------- ------------
<S> <C> <C>
Employee-related.................................. $1,618,000 $1,487,000
Sales taxes....................................... 156,000 81,000
Dividends payable................................. -- 496,000
Other............................................. 476,000 128,000
---------- ----------
$2,250,000 $2,192,000
========== ==========
</TABLE>
8. Long-term Debt
Long-term debt consists of a mortgage payable to a bank, dated December 21,
1994. Interest on the outstanding principal balance is charged at the bank's
prime rate plus .25% (8.5% at August 27, 1996). Monthly installments of $12,600
plus interest are required through the maturity date of the mortgage, November
21, 1999. The mortgage is secured by substantially all of the Predecessor's
property, plant and equipment. Under the terms of the mortgage, the Predecessor
must comply with certain restrictive covenants, which among other things
require that the Predecessor maintain minimum net worth and debt coverage, as
defined in the mortgage.
86
<PAGE>
PIROD, INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(Unaudited)
As of August 27, 1996, scheduled future principal payments of long-term debt
are as follows (for the periods ended December 31):
<TABLE>
<S> <C>
1996........................................................... $ 50,000
1997........................................................... 151,000
1998........................................................... 151,000
1999........................................................... 905,000
----------
$1,257,000
==========
</TABLE>
9. Stockholders' Equity
Notes receivable from shareholders
In 1993 and 1992, 7,500 shares of the Predecessor's no par value stock were
sold to five employees. The purchasers each paid 10% of the purchase price and
the Predecessor accepted notes receivable for the remaining 90% of the purchase
price. The notes are to be paid in ten equal annual installments and interest
on the notes accrues at an annual rate of 7.88%. Any cash dividends declared on
the stock, net of federal and state income taxes, must be used to repay the
note and interest. There is no penalty for prepayment of the notes. All shares
purchased under these notes are held in escrow until the notes are paid in
full.
Common Stock Restrictions
The shares described above and those issued to the Plymouth shareholder
(Note 3) are subject to a stock restriction agreement which restricts the sale
or transfer of shares to the Predecessor or to the other stockholders. Under
this agreement, the Predecessor has the first option to repurchase the shares.
If the Predecessor does not exercise its option, the other stockholders may
purchase a portion of the shares in proportion to the number of shares they
hold in relation to the total outstanding shares, other than those offered for
sale. The price for the shares shall be the stated value as determined at the
annual stockholders meeting.
10. Profit Sharing Plan
The Predecessor provides certain benefits to its employees through a profit
sharing plan established under Section 401(a) of the Internal Revenue Code (the
"Code"). The Predecessor contributes 15% of the respective employee's annual
gross wages to the plan, subject to limitations under the Code. The
Predecessor's expense related to this plan was approximately $698,000 and
$618,000 during the period from January 1, 1996 to August 27, 1996 and the year
ended December 31, 1995, respectively,
11. Related Party Transactions
The Predecessor leases buildings under non-cancelable operating leases with
related parties (Note 13). During the period from January 1, 1996 to August 27,
1996 rent expense under these agreements approximated $80,000.
12. Supplemental Disclosure of Cash Flow Information
Cash paid for interest totaled $294,000 and $380,000 during the period from
January 1, 1996 to August 27, 1996 and the year ended December 31, 1995,
respectively. Cash paid for income taxes totaled $63,000 and $22,000 during the
period from January 1, 1996 to August 27, 1996 and the year ended December 31,
1995, respectively.
87
<PAGE>
PIROD, INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
13. Commitments and Contingencies
The Predecessor leases certain equipment and buildings under cancelable
operating leases expiring at various times through the year 2001. Generally,
these lease agreements contain renewal provisions for additional terms of
varying length and require the Predecessor to pay all executory costs. Rental
expense incurred under these lease agreements was $317,000 and $458,000 for the
period from January 1, 1996 to August 27, 1996 and the year ended December 31,
1995, respectively.
As of August 27, 1996, future minimum lease payments under these operating
lease agreements are as follows (for the periods ended December 31):
<TABLE>
<S> <C>
1996........................................................... $ 192,000
1997........................................................... 553,000
1998........................................................... 403,000
1999........................................................... 260,000
2000........................................................... 234,000
2001 and thereafter............................................ 128,000
----------
$1,770,000
==========
</TABLE>
14. Subsequent Event--Acquisition of the Predecessor
On August 28, 1996, the Predecessor entered into an agreement whereby the
Predecessor sold substantially all of its operating assets and liabilities to
PiRod Holdings, Inc. In connection with the sale, the Predecessor received
consideration totaling approximately $58.9 million, consisting of $47 million
of cash, a senior subordinated note valued at $5.6 million and common stock and
warrants valued at $6.3 million. Subsequent to August 28, 1996, the Predecessor
changed its name to PH, Inc.
88
<PAGE>
PROPOSAL 2 --
ELECTION OF DIRECTORS
Nominees for Director
As described in "The Merger--Management of ROHN After the Merger; ROHN
Stockholders Agreement," the Trust, the PiRod Stockholders and ROHN have agreed
that the authorized number of directors to be elected at the Meeting shall be
ten, and the persons listed below have been selected as nominees for election
as directors by the Board of Directors of ROHN and, if elected, will serve
until the next annual meeting or until their successors are elected and
qualified.
The Board of Directors of ROHN recommends a vote FOR the election of each
nominee for director.
Background Information Regarding Nominees
The table below sets forth the names of the nominees for director, their
principal occupations during the last five years and certain other information.
<TABLE>
<CAPTION>
Principal Occupations for the Last
Five Years,
Director Other Directorships and Committee
Name of Nominee Since Age Assignments
- --------------- -------- --- ------------------------------------
<S> <C> <C> <C>
Gene Locks.................... 1989 61 Chairman of the Board of ROHN
Industries, Inc. (May 1991 to
present); Founding partner, Greitzer
& Locks, attorneys. Member of
Trustees Advisory Committee to UNR
Asbestos-Disease Claims Trust (June
1989 to present). Other
directorships: Celotex Corporation
(August 1997 to present). Member of
ROHN's Executive and Compensation
Committees.
Darius W. Gaskins, Jr......... 1990 59 Co-Founding Partner, Carlisle,
Fagan, Gaskins & Wise Inc., a
management consulting firm (May 1993
to present); Partner, High Street
Associates, a management and
investment firm (June 1991 to
present); Chairman, Leaseway
Transportation Corp., a distribution
services provider (December 1994 to
April 1995). Other directorships:
Northwestern Steel and Wire Company,
a producer of steel and wire
products; Sapient Corporation, a
software company; Anacomp
Incorporated, a micrographics
supplier. Chair of ROHN's
Compensation Committee and member of
the Executive and Audit Committees.
</TABLE>
89
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations for the Last
Five Years,
Director Other Directorships and Committee
Name of Nominee Since Age Assignments
- --------------- -------- --- ------------------------------------
<S> <C> <C> <C>
Brian B. Pemberton............ 1997 54 President and Chief Executive
Officer of ROHN Industries, Inc.
(commencing April 14, 1997);
President, Skycell Services, a
division of American Mobile
Satellite Corporation, a common
carrier providing satellite-based
mobile voice and data services to
North America ("AMSC") (August 1996
to December 1996); President and
Chief Executive Officer, AMSC (April
1995 to August 1996); President,
AMSC (April 1990 to April 1995).
Other directorships: AC Nielsen
Corporation, provider of market
research. Chair of ROHN's Executive
Committee.
Myron Noble................... -- 61 Chairman of the Board of ROHN
Industries, Inc. (commencing with
the Effective Time of the Merger);
Chairman and Chief Executive Officer
of PiRod Inc. (commencing in 1996);
President PH, Inc., (commencing in
1996); President, Pi-Rod, Inc., an
Indiana corporation (1973 to 1996);
Other directorship: PiRod Holdings,
Inc. (1996 to present); Miller
Building Systems, Inc., a
manufacturer of portable building
systems (1995 to 1998); St. Joseph
Capital Bank (1997 to present).
John H. Laeri, Jr............. -- 63 Chairman, Meadowcraft Associates
Inc., a private investment banking
firm (January 1991 to present);
President and Chief Executive
Officer, The GolfCoach Inc., a golf
products marketer (December 1998 to
present); Chairman, UNR Asbestos-
Disease Claims Trust (1990 to
present).
Michael E. Levine............. -- 57 Executive Vice President--Marketing
& International (August 1994 to
present) and Executive Vice
President--Marketing (July 1992 to
August 1994) of Northwest Airlines
Corporation; Trustee, UNR Asbestos-
Disease Claims Trust (1989 to
present).
Paul H. Spinale............... -- 35 Joined Bain Capital, Inc. in 1992; a
Principal since 1996.
Marc B. Wolpow................ -- 40 Managing Director of Bain Capital,
Inc. since 1993 and of Sankaty
Advisors, Inc. (an affiliate of Bain
Capital, Inc.) since 1997. Also a
director of Physicians Quality Care,
Inc., Miltex Holdings, Inc., PSI,
Inc. and American Pad & Paper
Company.
..................... --
..................... --
</TABLE>
90
<PAGE>
ROHN did not have an annual meeting of stockholders in 1998, and the Meeting
at which the Merger will be considered will also serve as ROHN's delayed 1998
annual meeting. The information on pages 91 to 96 below regarding ROHN's Board
of Directors and executive officers was included in part in ROHN's Annual
Report to the SEC on Form 10-K for the year ended December 31, 1997, updated
herein to include information for the year ended December 31, 1998, where
available.
Directors' Compensation
ROHN employees who serve as directors of ROHN receive no compensation for
such services. Non-employee directors of ROHN are paid compensation at an
annual rate of $30,000 (the Chairman receives $50,000), payable in quarterly
installments. Non-employee directors have the right to receive all or part of
their annual compensation in shares of restricted ROHN common stock. Non-
employee directors receive $1,000 for each Board meeting of a committee of the
Board which they attend in person or by telephone. Directors are also
reimbursed for their out-of-pocket expenses incurred in connection with such
meetings.
Board Meetings; Board Committee Functions and Composition
The Board of Directors met five times in 1997 and ten times during 1998. The
Board has an Audit Committee, a Compensation Committee and certain other
committees. The Board does not have a standing Nominating Committee.
The Audit Committee currently consists of Charles M. Brennan, III (Chair),
Darius W. Gaskins, Jr. and Ruth R. McMullin. The Audit Committee makes
recommendations to the full Board of Directors regarding engagement of
independent public accountants; reviews and approves the scope of independent
audits and the fees and other arrangements regarding such services; reviews the
results of the annual audit with the independent public accountants; and
generally reviews the adequacy of ROHN's accounting systems, internal
accounting controls and applications of accounting policies to new or unusual
circumstances. The Audit Committee met twice during 1997 and twice during 1998.
The Compensation Committee currently consists of Darius W. Gaskins, Jr.
(Chair), Gene Locks and Ruth R. McMullin and has the responsibility for
considering and making recommendations to the full Board of Directors regarding
officers' compensation and benefits and ROHN's organizational structure. The
Compensation Committee met four times during 1997 and two times during 1998.
Executive Officers
The executive officers of ROHN are:
<TABLE>
<CAPTION>
Name Age Experience (Tenure)
- ---- --- -------------------
<S> <C> <C>
Brian B. Pemberton.............. 54 See above.
Richard L. Rohn................. 53 Vice President-Shelters of ROHN (commencing
September 1, 1997); President Shelter
Operations, ROHN, Inc., a subsidiary of
ROHN (1992-present).
James R. Cote................... 48 Vice President--International and Corporate
Development of ROHN (commencing April 1,
1998); Vice President Marketing and Sales
of the Company (1997-1998); Vice President
Sales and Marketing, ROHN Division of UNR
Industries, Inc. (1993-1997).
David V. LaRusso................ 44 Vice President and Chief Financial Officer
of ROHN (commencing September 1, 1997);
President and Chief Executive Officer,
Allied HealthCare Products, Inc. (1994-
1996); Vice President and Chief Financial
Officer (1988-1996).
</TABLE>
91
<PAGE>
<TABLE>
<CAPTION>
Name Age Experience (Tenure)
- ---- --- -------------------
<S> <C> <C>
Timothy W. Kirk................. 42 Vice President, General Counsel and
Secretary of ROHN (commencing December 1,
1997); General Counsel, Central Illinois
Light Company (1993-1997).
Craig A. Ahlstrom............... 52 Vice President--Sales and Marketing of ROHN
(commencing April 1, 1998); Channel and
Sales Manager, Xantel Corporation (1997-
1998); Consulting Manager, Lexmark
International (1995-1997); Vice President--
Sales and Marketing, Supreme Products
(1993-1995).
</TABLE>
All of the executive officers are elected by the Board of the Directors of
ROHN at the annual meeting of stockholders for one-year terms and serve until
such time as their respective successors are duly elected and qualified.
Management Compensation
Summary Compensation Table
The following table sets forth the total cash and non-cash compensation in
each of 1995, 1996, 1997 and 1998 received by ROHN's Chief Executive Officers
serving as such in 1997 and 1998 and the Company's four other most highly
compensated executive officers serving at the end of 1997 and 1998.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------- ---------------------
Other
Annual Restricted Securities
Compen- Stock Underlying
Name and Principal Salary Bonus sation Awards Options All Other
Position Year ($) ($) ($)(2) ($)(3) (#)(4) Compensation($)
------------------ ---- ------- ------- ------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas A. Gildehaus(1).. 1998 -- -- -- -- -- --
Former President and 1997 106,534 -- 18,034 -- -- 1,125,000(8)
Chief Executive Officer 1996 375,000 300,000 205,079 -- -- 22,298(8)
1995 375,000 300,000 324,091 -- -- 71,107(8)
Henry Grey(1)........... 1998 -- -- -- -- -- --
Former Senior Vice-
President and 1997 170,432 -- 10,075 -- -- 920,150(9)
Chief Financial Officer 1996 190,700 135,000 113,933 -- -- 12,033(9)
1995 190,100 130,000 180,051 48,491 -- 32,763(9)
Brian B. Pemberton(5)... 1998 331,250 200,000 -- 587,500 450,000 2,500(10)
President and Chief
Executive Officer 1997 207,230 200,000 -- 750,000 100,000 56,315(11)
Richard Rohn............ 1998 183,462 168,000 -- 205,625 105,000 2,500(10)
Vice President--
Shelters 1997 174,785 90,000 -- 187,500 -- 2,375(10)
1996 172,046 172,000 -- 212,500 -- 2,375(10)
1995 200,436 172,000 -- 22,613 -- 2,310(10)
James R. Cote........... 1998 142,508 61,000 -- 176,250 90,000 2,500(10)
Vice President--
International 1997 134,200 30,000 -- -- -- 2,500(10)
& Corporate Development 1996 171,625 60,392 -- 61,250 -- 1,989(10)
1995 182,280 -- -- -- -- 1,924(10)
David V. LaRusso(6)..... 1998 163,077 68,000 -- 176,250 90,000 1,108(10)
Vice President and 1997 49,231 20,000 -- -- 50,000 5,435(11)
Chief Financial Officer
Craig A. Ahlstrom(7).... 1998 103,924 52,000 -- 174,375 50,000 124,975(12)
Vice President--Sales &
Marketing
</TABLE>
92
<PAGE>
- --------
(1) Messrs. Gildehaus and Grey resigned their positions as executive officers,
and in the case of Mr. Gildehaus as a director, on the termination of
their employment on April 11, 1997 and June 30, 1997, respectively.
(2) Represents imputed annual interest at 7% (the prime rate on the date of
the loans) on interest-free loans to purchase stock under the 1994
Executive Stock Purchase Plan described under "Transactions with
Management" on page 99.
(3) Restricted Stock Awards are made pursuant to the terms of the ROHN 1992
Restricted Stock Plan. The stock is valued at the closing price of the
stock on the NASDAQ Stock Market on the date of the award. The restricted
stock held by Messrs. Gildehaus and Grey became vested on the termination
of their employment. On December 31, 1997, Mr. Pemberton held 100,000
shares of restricted stock valued at $515,600, and on December 31, 1998,
he held 175,000 shares of restricted stock valued at $601,562. On December
31, 1997, Mr. Rohn held 56,024 shares of restricted stock valued at
$288,860, and on December 31, 1998, held 73,990 shares of restricted stock
valued at $254,341. During 1997, Messrs. Pemberton and Rohn were awarded
100,000 and 25,000 shares of restricted stock, respectively, and during
1998, they were awarded 100,000 and 35,000 shares, respectively. The
shares of restricted stock awarded to Messrs. Pemberton and Rohn in 1997
and 1998 vest 25% per year over a four-year period from the date of the
grant. On December 31, 1997, Mr. Cote held 10,000 shares of restricted
stock valued at $51,560, and on December 31. 1998, he held 40,000 shares
of restricted stock valued at $137,500. During 1996, Mr. Cote was awarded
10,000 shares of restricted stock that will vest 100% in five years.
During 1998, Mr. Cote was awarded 30,000 shares of restricted stock that
will vest 25% per year over a four-year period from the date of grant.
During 1998, Messrs. LaRusso and Ahlstrom were each awarded 30,000 shares
of restricted stock which will vest 25% per year over a four-year period
from the date of the grant. On December 31, 1998, Messrs. LaRusso and
Ahlstrom each held 30,000 shares of restricted stock valued at $103,125.
Messrs. Pemberton, Rohn, Cote, LaRusso and Ahlstrom were entitled to
receive all dividends on restricted stock held by them.
(4) See "Option Grants in 1997 and 1998" below.
(5) Mr. Pemberton's employment with ROHN commenced on April 14, 1997.
(6) Mr. LaRusso's employment with ROHN commenced on September 2, 1997.
(7) Mr. Ahlstrom's employment with ROHN commenced on April 1, 1998.
(8) The amounts shown for 1995 and 1996 include ROHN's contributions to Mr.
Gildehaus' 401(k) plan of $3,234 and $3,325 in 1995 and 1996,
respectively; contributions to Mr. Gildehaus' account in the ROHN
Employees Profit Sharing Plan of $13,500 and $6,000 in 1995 and 1996,
respectively; contributions to Mr. Gildehaus' account in the ROHN
Industries, Inc. Supplemental Executive Retirement Plan of $50,400 and
$9,000 in 1995 and 1996, respectively; and annual life insurance premiums
of $3,973 and $3,973 in 1995 and 1996, respectively. Mr. Gildehaus'
employment was terminated on April 11, 1997, and the amount shown for 1997
constitutes the severance payment made to Mr. Gildehaus pursuant to a
Change of Control Agreement which is described on page 98.
(9) The amounts shown for 1995 and 1996 include ROHN's contributions to Mr.
Grey's 401(k) plan of $3,234 and $3,325 respectively; contributions to Mr.
Grey's Profit Sharing Plan of $13,500 and $6,000 for the years 1995 and
1996, respectively; and contributions to the Supplemental Executive
Retirement Plan of $16,029 and $2,708 for 1995 and 1996, respectively. Mr.
Grey's employment was terminated on June 30, 1997, and the amounts shown
for 1997 include a severance payment of $889,650 made to Mr. Grey pursuant
to a Change of Control Agreement, which is described on page 98, and
$30,500 of personal property that was transferred to him.
(10) The amounts shown constitute ROHN's contributions to the 401(k) plan for
these employees.
(11) The amounts shown are for relocation expenses incurred by Messrs.
Pemberton and LaRusso.
(12) The amount shown is for relocation expenses of $58,271, a relocation bonus
of $41,704 and a signing bonus of $25,000 that were negotiated with Mr.
Ahlstrom.
93
<PAGE>
Option Grants in 1997 and 1998(1)
<TABLE>
<CAPTION>
Percent of Potential Realizable
Number of Total Value
Securities Options ($) at Assumed Annual
Underlying Granted in Exercise Rates of Stock Price
Options Fiscal or Base Expiration Appreciation for
Name Year Granted (#) Year Price ($) Date Option Terms (2)
---- ---- ----------- ---------- --------- ---------- ---------------------
5% 10%
---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas A. Gildehaus..... 1998 -- -- n/a n/a n/a n/a
1997 -- -- n/a n/a n/a n/a
Henry Grey.............. 1998 -- -- n/a n/a n/a n/a
1997 -- -- n/a n/a n/a n/a
Brian B. Pemberton...... 1998 450,000 47% $ 5.875 03/11/08 $1,662,628 $4,213,450
1997 100,000 48% $ 7.75 04/14/02 214,118 487,393
Richard Rohn............ 1998 105,000 11% $ 5.875 03/11/08 387,947 983,138
1997 -- -- -- -- -- --
James R. Cote........... 1998 90,000 9% $ 5.875 03/11/08 332,526 842,690
1997 -- -- -- -- -- --
David V. LaRusso........ 1998 90,000 9% $ 5.875 03/11/08 332,526 842,690
1997 50,000 24% $ 4.37 09/02/02 60,368 137,413
Craig A. Ahlstrom....... 1998 50,000 5% $5.8125 4/21/03 80,301 177,445
1997 -- -- -- -- -- --
</TABLE>
- --------
(1) ROHN stock option plans are administered by the Compensation Committee of
the Board of Directors, which has authority to determine the employees to
whom, and the terms at which, options will be granted. Under the terms of
ROHN's plan, the Compensation Committee retains discretion, subject to
plan limits, to modify the terms of outstanding options.
The per share option prices are the fair market value of ROHN's common
stock on the date of the grant less any extraordinary dividends paid after
the grant date. The options granted to Mr. Pemberton in 1997 became
exercisable twelve months from the date of the grant. All remaining options
granted are exercisable at the rate of one-third per year over a three year
period. The options granted to Messrs. Pemberton and LaRusso in 1997, and
the options granted to Mr. Ahlstrom in 1998, have a term of five years. All
other options were granted for a term of ten years. In addition, all
options granted become exercisable upon a change of control as defined in
the plans.
(2) The amounts shown in these columns are calculated at the 5% and 10% rates
set by the SEC and are not intended to forecast future appreciation of
ROHN's stock price.
Aggregate Option Exercises in Last Two Fiscal Years and Fiscal Year-End
Option Values for 1997 and 1998
<TABLE>
<CAPTION>
Shares
Acquired Value Number of Securities Value of Unexercised In-
on ($) Underlying Options at the-money Options at
Name Year Exercise Realized Fiscal Year-End Fiscal Year-End (1)
---- ---- -------- -------- ------------------------- -------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas A. Gildehaus..... 1998 -- -- -- -- -- --
1997 -- -- -- -- -- --
Henry Grey.............. 1998 -- -- -- -- -- --
1997 -- -- -- -- -- --
Brian B. Pemberton...... 1998 -- -- 100,000 450,000 -- --
1997 -- -- -- 100,000 -- --
Richard Rohn............ 1998 -- -- 105,000 -- --
1997 50,000 $267,500 -- -- -- --
James R. Cote........... 1998 -- -- -- 90,000 -- --
1997 -- -- -- -- -- --
David V. LaRusso........ 1998 -- -- 16,667 123,333 -- --
1997 -- -- -- 50,000 -- $39,300
Craig A. Ahlstrom....... 1998 -- -- -- 50,000 -- --
1997 -- -- -- -- -- --
</TABLE>
- --------
(1) On December 31, 1997, the market value of ROHN stock was $5.156 per share
(and it was $3.406 on December 31, 1998).
94
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee is composed of three independent directors. No
member of the Committee is a former or current officer or employee of ROHN or
any of its subsidiaries. The Committee formulates the compensation policy and
structure for executive officers, reviews salary and bonus recommendations for
those officers and submits its recommendations to the full Board of Directors
for approval. The Compensation Committee is solely responsible for determining
long-term incentive compensation granted to executive officers under the stock
option, restricted stock and other long-term incentive plans previously
approved by the stockholders.
In formulating and implementing compensation programs, it has been the
philosophy of the Compensation Committee that a substantial portion of
executive compensation should be related to ROHN's financial performance.
Accordingly, compensation programs have been structured to include incentives
based on measures of ROHN's financial performance. The compensation programs
for executive officers have consisted of base salary and short-term and long-
term incentive compensation plans. The Compensation Committee determined that
the short-term and long-term incentive programs for 1997 and 1998 would be
based 50% upon meeting the ROHN budget and 50% upon achieving mutually
negotiated personal objectives.
Base Salary
The Committee annually reviews the base salary of each executive officer. In
determining salary adjustments, the Committee considers individual job
performance, length of employment, level of responsibility and information
supplied by an independent compensation consulting firm concerning the average
compensation levels of executive officers in a large group of companies with
average sales of approximately $345 million ("Compensation Peer Group"). The
compensation data used for comparison from the Compensation Peer Group has been
statistically adjusted to reflect ROHN's sales size. The Committee believes
that the Compensation Peer Group, as adjusted, is an appropriate peer group for
compensation purposes. While the salary for the Chief Executive Officer is
typically reviewed annually, the Chief Executive Officer's 1997 base salary was
determined by negotiation when he was hired in April of 1997. The base salary
levels of the other executive officers are also reviewed by the Committee on a
calendar year basis. In 1997, base salaries for executive officers continuing
from 1996 were increased approximately 6% from 1996 levels. Base salaries for
executive officers who were hired during 1997 and 1998 were determined by
negotiation. Based upon the Compensation Committee's analysis, and upon the
information provided by an independent compensation consultant, the Committee
believed that the 1997 base salary of ROHN's Chief Executive Officer, Mr.
Pemberton, was approximately 6% above market, and the base salaries of the
other executive officers were moderately above market. Accordingly, base
salaries for executive officers were not increased during 1998.
Short-term Incentives
Historically, a significant part of short-term executive compensation is
based on an incentive bonus. Under the 1997 and 1998 Bonus Plan, 50% of an
executive officer's target bonus is tied to meeting the ROHN budget and 50% is
tied to mutually negotiated personal objectives. For 1997, the Chief Executive
Officer and Richard Rohn, the target bonus was 50% of salary and the maximum
bonus opportunity was 100% of salary. For other executive officers, the target
bonus was 33% of salary and the maximum bonus opportunity was 66% of salary.
For 1998, the target bonus for the Chief Executive Officer, Richard Rohn and
other executive officers was 75%, 67% and 50% of salary, respectively, with a
maximum bonus opportunity of 100% of salary.
Personal goals for the Chief Executive Officer were negotiated between him
and the Compensation Committee as more fully described below. The personal
objectives for other executive officers were negotiated between the Chief
Executive Officer and those executives. Bonuses were awarded to executive
officers, other than the Chief Executive Officer, for 1997 and 1998 based upon
a subjective evaluation by the Compensation Committee of the achievements by
the executive officers.
Long-term Incentives
ROHN's long-term incentive plans consist of Stock Option Plans, a Restricted
Stock Plan and a Stock Purchase Plan. The Committee believes that an
appropriate level of ownership by executive management will
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enhance the incentive of these executive officers to manage ROHN for the
benefit of all stockholders. In 1997, 200,000 options were granted to the named
executive officers under the 1990 Stock Option Plan pursuant to their
employment agreements, 100,000 of which were awarded to the Chief Executive
Officer and 50,000 of which were awarded to Mr. LaRusso. In 1997, 125,000
shares of common stock were awarded to executive officers under the Restricted
Stock Plan, 100,000 shares of which were awarded to the Chief Executive Officer
pursuant to his employment agreement and 25,000 shares of which were awarded to
Richard L. Rohn. No stock was sold to executive officers in 1997 under the
Stock Purchase Plan.
In 1998, 785,000 options were granted to the named executive officers as set
forth on page 94. In 1998, 225,000 shares of common stock were awarded to the
named executive officers under the Restricted Stock Plan, 100,000 shares of
which were awarded to the Chief Executive Officer, 35,000 shares of which were
awarded to Richard Rohn and 30,000 shares of which were awarded to each of
Messrs. Cote, LaRusso and Ahlstrom. No stock was sold to executive officers in
1998 under the Stock Purchase Plan.
Chief Executive Officer Compensation
Brian B. Pemberton was elected President and Chief Executive Officer of ROHN
effective April 14, 1997. ROHN entered into an employment agreement with Mr.
Pemberton which provides for a base annual salary of $325,000, subject to
annual review and adjustment by the Compensation Committee. Mr. Pemberton is
eligible for an annual bonus. In addition, Mr. Pemberton was awarded 100,000
shares of restricted stock under the Restricted Stock Plan and options to
purchase an additional 100,000 shares under ROHN's Key Executives' Stock Option
Plan. Those shares of restricted stock will vest at the rate of 25% per year
during a four-year period of continuous employment or in the event of death,
disability or a change of control of ROHN, as provided in the Restricted Stock
Plan. Those stock options are exercisable after one year of employment at the
market price of the stock as of April 1, 1997, and expire in five years. Mr.
Pemberton is covered by ROHN's health, disability and life insurance program
and other benefits generally provided to ROHN executives.
For 1997 and 1998, Mr. Pemberton's bonus award was based 50% on the
performance of ROHN in relation to the budget and 50% on the personal goals for
Mr. Pemberton established through consultation between Mr. Pemberton and the
Compensation Committee. The 1997 goals for Mr. Pemberton included
implementation of the 1997 budget and business plan, the development of
stockholder relationships, recruitment and development of other executive
officers, and the expansion of international business opportunities for ROHN.
These goals were not ranked or weighted. Mr. Pemberton was awarded a bonus of
$200,000 based upon a subjective evaluation of his achievements for 1997 by the
Compensation Committee.
The 1998 goals for Mr. Pemberton included assisting the Trust's efforts to
sell all or a part of its ROHN shares, to enhance stockholder value, to develop
a long-term strategy for ROHN and to develop additional manufacturing capacity.
These goals were not ranked or weighted. Mr. Pemberton was awarded a bonus of
$200,000 based upon a subjective evaluation of his achievements for 1998 by the
Compensation Committee.
Section 162(m) of the Internal Revenue Code
The Committee has considered the effect of Section 162(m) of the Internal
Revenue Code, which limits the tax deduction to $1 million for compensation
paid to the top five executive officers unless certain requirements are met. As
a general matter, the Committee does not expect that any executive officer's
compensation is likely to exceed $1 million. Accordingly, the Committee
concluded not to make any changes in ROHN's existing compensation programs. The
Committee will continue to consider the impact of Section 162(m) and to assess
alternatives to minimize or eliminate any loss of tax deductions in future
years consistent with the objectives of ROHN's executive compensation programs.
Compensation Committee
Darius W. Gaskins, Jr., Chair
Gene Locks
Ruth R. McMullin
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ROHN Stock Performance Graph
The following performance graph compares ROHN's total stockholder return on
its common stock for a six year period (December 31, 1992 to December 31, 1998)
with the cumulative total return of the Standard & Poor's 500 Stock Index and
the Standard & Poor's Communications Equipment 500 Index. This graph assumes an
investment of $100 on December 31, 1992 and reinvestment of dividends.
<TABLE>
<CAPTION>
S&P Comm.
Date ROHN S&P 500 Equipment 500
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
December 1992 $100 $100 $100
December 1993 $130 $110 $ 96
December 1994 $127 $112 $110
December 1995 $248 $153 $164
December 1996 $247 $188 $192
December 1997 $216 $251 $250
December 1998 $144 $322 $441
</TABLE>
Employment Contracts and Other Agreements
Employment Agreement -- Brian B. Pemberton
Brian B. Pemberton was elected President and Chief Executive Officer of ROHN
on April 14, 1997. ROHN has entered into an employment agreement with Mr.
Pemberton which provides for a base salary of $325,000, subject to annual
review and adjustment by the Compensation Committee. Mr. Pemberton will be
eligible for an annual bonus under ROHN's Incentive Bonus Plan which provides a
maximum bonus opportunity of 100% of base salary for senior executive officers.
In addition, Mr. Pemberton was awarded 100,000 shares of restricted stock under
the Restricted Stock Plan and options to purchase an additional
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100,000 shares under ROHN's Stock Option Plan. Restricted stock will vest at
the rate of 25% per year during a four-year period of continuous employment or
in the event of death, disability or a change of control of ROHN, as provided
in the Restricted Stock Plan. Stock options are currently exercisable at the
market price of the stock as of April 1, 1997, and expire in April 2002. Mr.
Pemberton is covered by ROHN's health, disability and life insurance program
and other benefits generally provided to ROHN executives. Mr. Pemberton's
employment may be terminated by either party at any time for any reason, but in
the event his employment is terminated by ROHN without cause, as defined in the
agreement, Mr. Pemberton will be entitled to a severance payment equal to one
year's base salary then in effect plus the amount of the target bonus under the
Incentive Bonus Plan for the year in which termination occurs.
Change of Control Agreements
At various times, ROHN has entered into Change of Control Agreements
("Control Agreements") with various executive officers. On March 5, 1993, ROHN
entered into a Control Agreement with Henry Grey. On July 1, 1995, ROHN entered
into a Control Agreement with Thomas A. Gildehaus. On November 30, 1996, ROHN
entered into a Control Agreement with James Cote. On September 2, 1997, ROHN
entered into a Control Agreement with David V. LaRusso. These Control
Agreements were for a term of three years, subject to renewal for additional
three year terms. On March 5, 1996, the Control Agreement of Mr. Grey was
renewed for an additional three-year term. On July 24, 1998, the Control
Agreement with Mr. LaRusso was terminated.
A Change of Control includes (i) the acquisition by any person or group
acting in concert of beneficial ownership of 50% or more of ROHN's outstanding
shares, with certain exceptions, (ii) a change in the composition of ROHN's
Board of Directors in any 24-month or less period such that a majority of the
directors serving at the end of the period were not serving at the beginning of
the period, unless at the end of the period the majority of the directors in
office were nominated upon the recommendation of a majority of the Board at the
beginning of the period, or (iii) approval by stockholders of a merger,
consolidation or similar transaction (as to which those stockholders
immediately prior to such transaction are not the owners of more than 75% of
the resulting corporation's outstanding voting stock after such event) or the
sale of all or substantially all of ROHN's consolidated assets. The
Compensation Committee recognized that the sale of four of ROHN's five
operating divisions in 1996 constituted a change of control for purposes of the
Control Agreements.
If, during the term of these Control Agreements, a Change of Control occurs,
and within a two year period from the date of such Change of Control, either
(i) the executive's employment with ROHN is terminated by ROHN other than for
cause or on account of the executive's death, permanent disability or
retirement, or (ii) the executive resigns for good reason, then ROHN is
required to pay to the executive a severance payment. The severance payments
are amounts equal to three times base salary for Mr. Gildehaus, three times
base salary plus target bonus for Mr. Grey, and one and one-third times base
salary for Mr. Cote, for the year in which termination occurs; provided that in
no event may the total amount of the severance payment exceed 2.99 times the
five year average W-2 income of the executive. The severance payment is payable
in a single lump sum payable within 30 days of the termination of employment or
resignation.
In addition to the severance payment, ROHN is required to provide health,
disability and life insurance in accordance with the plans maintained by ROHN
for executives for a period of three years (one year for Mr. Cote) from the
date of termination of the executive's employment, provided that health,
disability and life insurance benefits cease if the executive becomes employed
during such period and receives similar benefits in connection with such
employment.
During employment and for a period of one year after the termination of
employment for any reason, the executive may not enter into, be connected with,
or work for an individual, firm or corporation which is then in substantial
competition with ROHN in the United States.
On April 11, 1997 and June 30, 1997, respectively, the employment of Messrs.
Gildehaus and Grey was terminated, triggering severance benefits under their
Control Agreements.
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Letter Agreements
On July 24, 1998, ROHN entered into letter agreements (the "Letter
Agreements") with the following executive officers of ROHN: Messrs. David V.
LaRusso, Richard L. Rohn, Timothy W. Kirk, Craig A. Ahlstrom and Jay Buehler,
former Vice President-Operations of ROHN. The Letter Agreements each provide
that if the employment of the covered executive officer is terminated by ROHN
without cause, as defined in the Letter Agreement, prior to July 24, 2001, the
terminated executive officer will be entitled to a severance payment equal to
one year's base salary then in effect plus the amount of the target bonus under
the Incentive Bonus Plan for the year in which termination occurs. Mr. Buehler
resigned in November 1998 and ROHN made a severance payment of $232,132 to Mr.
Buehler.
Indemnification Agreements
At various times, ROHN has entered into Indemnification Agreements
("Indemnification Agreements") with various executive officers and directors
(each an "Indemnitee"). On June 20, 1990, ROHN entered into an Indemnification
Agreement with each of Henry Grey, Charles M. Brennan, III, Darius W. Gaskins,
Jr. and Ruth McMullin. On July 1, 1992, ROHN entered into an Indemnification
Agreement with Thomas A. Gildehaus. On November 22, 1995, ROHN entered into an
Indemnification Agreement with Gene Locks. These Indemnification Agreements
provide that ROHN shall indemnify, and advance expenses (as defined therein)
to, each Indemnitee to the fullest extent permitted by law.
Transactions with Management
Pursuant to the ROHN 1994 Executive Stock Purchase Plan, Thomas A. Gildehaus
and Henry Grey purchased a total of 1,400,000 shares of common stock of ROHN on
September 9, 1994 at a price of $5.525 per share. The purchase price was the
average of the average of the reported high and low prices for ROHN's common
stock on the NASDAQ Stock Market on each of the five trading days preceding the
purchase. Shares were paid for in cash in the amount of the par value of the
shares ($.01 per share) and the balance in promissory notes due in three years.
The notes were interest free (although for tax purposes interest is imputed),
except that in the event that a participant resigned from ROHN or was
terminated for cause, the notes would become due and interest at the applicable
Federal rate under Section 1274 of the Internal Revenue Code would be applied
retroactively from the date of the notes. If the shares were sold prior to the
expiration of three years other than in connection with a Change in Control (as
defined under "--Change of Control Agreements," above), interest would be
applied retroactively from the date of the note at the applicable Federal rate.
Dividends and distributions on the shares, after reduction for federal and
state taxes, would be paid to ROHN to be applied to the principal of the notes.
The notes were limited recourse in that, if the stock was insufficient to
satisfy the loan balance at maturity, the participant could tender the shares
in partial payment of the notes and would be personally liable for that portion
of the deficiency that exceeded 25% of the loan balance (before applying the
security). ROHN's recourse was limited to the shares if the participant dies,
became disabled or was terminated without cause, if there was a Change in
Control of ROHN or if ROHN exercised its option to apply the shares to the
notes upon the participant's resigning or being terminated for cause. The
amounts of the promissory notes executed by Messrs. Gildehaus and Grey on the
date of the foregoing transactions were $4,963,500 and $2,757,500,
respectively. On March 31, 1997, ROHN applied shares held under the plan for
Messrs. Gildehaus and Grey sufficient to satisfy the unpaid principal of their
notes.
At a Board of Directors meeting on December 5, 1996, the Board determined
that it was in the best interests of ROHN to transfer certain contingent
liabilities associated with discontinued operations (the "Liabilities") to
Folding Carrier Corporation, a wholly owned subsidiary of ROHN ("Folding
Carrier"). The Liabilities, estimated at $6,975,000, and an equal amount of
cash were transferred to Folding Carrier, and Folding Carrier issued to ROHN 18
shares of Class B (non-voting) common stock, par value $10 per share. This
Class B stock represents approximately 15% of the outstanding common stock of
Folding Carrier. The
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ROHN Board has also determined that it was in the best interests of ROHN to
provide a financial incentive in the form of stock to the management of Folding
Carrier to efficiently manage and satisfy the Liabilities at the lowest
possible cost. Accordingly, pursuant to a Stock Purchase and Sale Agreement
(the "Agreement") ROHN sold nine shares of Class B stock of Folding Carrier
(the "Shares") to each of Henry Grey and Michael F. Boyle for the sum of $90,
or an amount equal to the par value of the shares purchased. Mr. Grey was
Senior Vice President and Chief Financial Officer of ROHN and was a Vice
President of Folding Carrier; Mr. Boyle was also a Vice President of Folding
Carrier and a former Vice President of ROHN. Under the terms of the Agreement,
at such time as the Liabilities of Folding Carrier are discharged, or if either
Mr. Grey or Mr. Boyle ceases to provide services to Folding Carrier, ROHN was
required to buy (and the stockholder is required to sell) his Shares at their
book value. Messrs. Grey and Boyle resigned their positions with Folding
Carrier and their nine shares of Class B stock were repurchased by ROHN for
$155,006 each on December 31, 1997 in accordance with the Agreement.
BENEFICIAL OWNERSHIP OF ROHN SHARES
The following table sets forth information as of February 1, 1999 regarding
the beneficial ownership of ROHN by: (i) each person or group that has reported
beneficial ownership of more than five percent of the ROHN common stock
outstanding, (ii) ROHN's current directors and certain of its current executive
officers, and (iii) all of ROHN's current directors and officers as a group.
<TABLE>
<CAPTION>
Common Stock
--------------------------
Amount and
Nature of
Beneficial Percent
Beneficial Owner Ownership (1) of Class (2)
- ---------------- ------------- ------------
<S> <C> <C>
Principal Stockholders
UNR Asbestos-Disease Claims Trust (3)............... 29,348,051 55.5%
100 North Lincolnway
North Aurora, IL 60542
Portfolio Q Investors, L.P. (4)..................... 3,189,000 6.0
201 Main Street
Forth Worth, TX 76102
Directors and Executive Officers
Craig Ahlstrom...................................... 30,000 *
Charles M. Brennan, III............................. 25,690 *
James R. Cote (5)................................... 70,000 *
Darius W. Gaskins, Jr............................... 57,190 *
David V. LaRusso (5)................................ 76,500 *
Gene Locks.......................................... 28,650 *
Ruth R. McMullin.................................... 46,235 *
Brian B. Pemberton (5).............................. 455,000 *
Richard L. Rohn (5)................................. 210,344 *
All directors and officers as a group (10 persons)
(6)................................................ 1,052,909 2.0%
</TABLE>
- --------
(1) Unless otherwise noted, the persons listed beneficially own all shares set
forth opposite their respective names with sole power to vote and dispose
of such shares, except Mr. Pemberton (5,000 shares) wherein
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voting or investment power is shared with others. Mrs. McMullin's total
also includes 8,700 shares held by her spouse and 3,325 shares held in a
trust.
(2) Percentage ownership is not shown for directors or officers owning less
than one percent of the outstanding common stock.
(3) The Trustees of the Trust are John H. Laeri, Jr., Chairman, Michael E.
Levine, and David S. Schrager. The Trustees are deemed to share beneficial
ownership of the 29,348,051 Trust shares because they collectively possess
the power to vote and dispose of the Trust shares on behalf of the Trust,
except that the United States Bankruptcy Court for the Northern Division
of Illinois must approve sales of Trust shares. Pursuant to the Trust
Voting Agreement, the Trust has granted PiRod the right to vote the ROHN
shares held by the Trust (i) in favor of the Merger and for adoption and
approval of the Merger Agreement, (ii) against any action or agreement
that would result in a breach in any material respect of any
representation, warranty or covenant of ROHN in the Merger Agreement, and
(iii) against any action or agreement that would impede, interfere with,
or delay, postpone or attempt to discourage the Merger. PiRod has
disclaimed beneficial ownership of the ROHN shares held by the Trust.
(4) According to a Schedule 13D filed by Portfolio Q Investors with the SEC on
December 23, 1998, it and its affiliates had sole voting and dispositive
power over such ROHN shares.
(5) Includes 30,000, 46,500, 250,000 and 34,650 shares subject to stock
options exercisable within 60 days of February 1, 1999 for Messrs. Cote,
LaRusso, Pemberton and Rohn, respectively, and 389,450 shares subject to
stock options exercisable within 60 days of February 1, 1999 for all
current directors and executive officers as a group.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires ROHN's
executive officers and directors, and persons who own more than 10% of ROHN's
common stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. ROHN believes that during 1997 and 1998
its executive officers, directors and greater than 10% ROHN stockholders have
complied with applicable requirements.
PROPOSAL 3--
APPROVAL OF THE 1999 STOCK OPTION PLAN
The Board of Directors of ROHN on January 14, 1998, adopted the ROHN
Industries, Inc. 1999 Stock Option Plan (the "Option Plan"), subject to
approval by stockholders. A copy of the Option Plan is included as Appendix B
to this Proxy Statement/Prospectus.
The purpose of the Option Plan is to benefit ROHN and its subsidiaries by
offering certain present and future employees (including officers) a favorable
opportunity to become holders of stock in ROHN over a period of years, thereby
giving them a stake in the growth and prosperity of ROHN and encouraging the
continuance of their services with ROHN and its subsidiaries.
Summary. Under the Option Plan, ROHN may grant options to purchase up to
2,500,000 shares of common stock of ROHN. If any outstanding option expires or
is surrendered, cancelled or terminated for any reason, shares allocable to
such options shall again be available for grant,
The Compensation Committee of the Board of Directors (the "Committee")
administers the Option Plan. Subject to the terms of the Option Plan, the
Committee determines the terms and conditions of options granted under the
Option Plan.
The Option Plan permits the grant of qualified incentive stock options
("ISOs") or nonqualified stock options ("NSOs"). ISOs may be granted to
individuals who, at the time of grant, are employees of ROHN or its
affiliates. NSOs may be granted to directors and employees of ROHN or its
affiliates. The aggregate number of options which may be granted under the
Option Plan to any individual within any five-year period during the term of
the Option Plan is limited to 1,000,000 shares (subject to proportionate
adjustment for changes in capitalization).
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The exercise price of an option granted under the Option Plan is to be
determined by the Committee at the time of grant but may not be, in the case of
ISOs, less than the fair market value per share or, in the case of NSOs, less
than 85% of the fair market value per share, of ROHN common stock at the time
of grant. Each option must expire within ten years after the date of grant.
ISOs granted to person owning more than 10% of the voting stock of ROHN must
have an exercise price of at least 110% of the fair market value per share at
the date of grant and may not have terms exceeding five years. Unless otherwise
determined by the Committee, options granted under the Option Plan vest in
three equal annual installments commencing on the first anniversary of the date
of grant.
An optionee may exercise his or her option by giving notice to ROHN
specifying the number of shares to be purchased, accompanied by payment of the
exercise price in full in cash or by bank certified, cashier's or personal
check. Options may also be exercised in "cashless exercises" (delivery of
shares or cancellation of options having a fair market value equal to the
exercise price).
An optionee (or his or her estate in case of death) whose employment with
ROHN or any subsidiary ceases for any reason (other than for cause) may
exercise options that are exercisable at the time of termination within the
applicable periods following termination specified in the Option Plan. If an
optionee is terminated for "cause," his or her options shall expire as of the
first discovery by ROHN of any cause for termination.
Options generally are not transferable except by will or the laws of descent
and distribution or pursuant to a property settlement in a divorce proceeding.
If the shares of ROHN common stock are changed by a split-up or
consolidation of shares or similar capital adjustment, or payment of any stock
dividend, a proportionate adjustment will be made in the number and class of
shares subject to unexercised options or available for options and in the
exercise price for shares.
In the event of a "Change in Control," as defined in the Option Plan, all
options outstanding become immediately exercisable in full without regard to
any vesting schedule. An optionee has the right, within one year after any
"Change in Control," to require ROHN (or the surviving entity, if other than
ROHN) to purchase from the optionee any or all unexercised options at a per
option price equal to the excess of the fair market value per share (as defined
in the Option Plan) over the exercise price.
The Board of Directors may amend or discontinue the Option Plan, except the
approval of the holders of a majority of ROHN outstanding shares present and
entitled to vote at any meeting is required for any amendment which will (i)
increase the number of share issuable under the Option Plan, (ii) permit the
grant of options to a class of persons other than those currently permitted to
receive options under the Option Plan, (iii) reduce the exercise price of
outstanding options, or (iv) require stockholder approval under applicable law.
Federal Income Tax Consequences. The following discussion is only a summary
of general federal income tax consequences to ROHN and the optionees, and does
not cover all possible federal, state or local income tax consequences of
participation in the Option Plan.
Under existing law there will be no federal income tax consequences to
either the optionee or ROHN upon the grant of an ISO. Except as described
below, the optionee will not have to recognize any income upon the exercise of
an ISO. The tax consequences to an optionee of selling or disposing of the
shares purchased upon exercise of an ISO generally depend on how long he or she
has held the shares. If the optionee sells or disposes of the shares after the
later of (i) two years after the option grant date or (ii) one year after
purchase of shares, the employee will recognize a long-term capital gain (or
loss) measured by the excess (or deficit) of the amount realized from such sale
or disposition over the exercise price, and no deduction will be allowed to
ROHN. If the optionee sells or disposes of the shares (other than by death)
before the later of (i) two years after the option grant date or (ii) one year
after purchase of shares, the optionee will recognize ordinary income in the
year of sale or disposition, and ROHN will be entitled to a corresponding
deduction, to the extent the fair market value of the shares at the time they
were purchased exceeded the purchase price. Any additional gain is capital gain
to the optionee.
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An optionee may under certain circumstances be permitted to pay all or a
portion of the exercise price of an ISO by delivering shares of ROHN common
stock. If the shares delivered were acquired through a previous exercise of an
ISO or an option granted under an employee stock purchase plan, and if the
holding period requirement applicable to such shares has not been met, the
delivery of such shares could be treated as a taxable sale or disposition of
the shares. In general, where an optionee pays the exercise price of an ISO by
delivering shares of common stock, the optionee will have a zero tax basis in
the shares received that are in excess of the number of shares delivered in
payment of the exercise price.
For alternative minimum tax purposes, regardless of whether the optionee
satisfied the holding period requirement, the excess of the fair market value
of the shares on the exercise date over the exercise price will be treated as a
positive adjustment to the optionee's alternative minimum taxable income for
the year the ISO is exercised. If the shares are sold or disposed of in the
year the ISO was exercised, however, the positive adjustment taken into account
for alternative minimum tax purposes will not exceed the gain realized on such
sale or disposition. Exercise of an ISO may thus result in liability for
alternative minimum tax.
An ISO will generally be treated as an NSO for federal income tax purposes
if it is exercised more than three months after the optionee terminates his or
her relationship with ROHN, but this three-month limitation will not apply if
the relationship is terminated by the optionee's death.
There will be no federal income tax consequences to either the optionee or
ROHN upon the grant of an NSO. Upon the exercise of an NSO, the optionee will
recognize ordinary income in an amount equal to the excess of the fair market
value per share on the date of exercise over the exercise price, and ROHN
generally will be entitled to a corresponding federal income tax deduction.
If an optionee pays the exercise price of an NSO by surrendering shares of
ROHN common stock, then, to the extent the shares received upon exercise of the
option do not exceed the number of shares delivered, the optionee will be
treated as making a tax-free exchange of stock and the new shares received will
have the same tax basis and holding period requirement as the shares
surrendered. The optionee will recognize ordinary income in an amount equal to
the fair market value of the shares in excess of the shares delivered in
payment of the exercise price. The basis of those additional shares will equal
their fair market value on the date the option is exercised. If an optionee
exercises an NSO on a cashless basis as permitted under the Option Plan, the
optionee will recognize ordinary income equal to the fair market value of the
shares received and the optionee's initial tax basis in such shares will equal
their fair market value.
Adoption of The Plan. The affirmative vote of the holders of a majority of
shares of ROHN common stock present in person or by proxy and entitled to vote
at the Annual Meeting is necessary to approve the adoption of the Plan.
The Board of Directors believes that the Option Plan is in the best
interests of ROHN. By offering employees an attractive opportunity to buy ROHN
common stock, the Option Plan provides incentives for participants to maximize
stockholder value. The Option Plan also should help ROHN attract and retain
qualified employees. For these reasons, the Board of Directors recommends a
vote FOR approval of the ROHN Industries, Inc. 1998 Stock Option Plan.
EXPERTS
The consolidated financial statements of ROHN Industries, Inc. as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997 incorporated herein by reference to the ROHN 1997 Annual
Report on Form 10-K, have been so incorporated in reliance on the reports of
Arthur Andersen LLP, independent public accountants, given on the authority of
said firm as experts in accounting and auditing.
The consolidated financial statements of PiRod Holdings, Inc. as of December
28, 1997 and December 29, 1996 and for the year ended December 28, 1997 and the
period from July 24, 1996 (inception) to December 29, 1996, included in this
Proxy Statement/Prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
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STOCKHOLDER PROPOSALS; OTHER MATTERS
ROHN does not expect to hold an annual meeting of stockholders for 1999
until late in 1999, and will announce the date of the meeting, if one is
proposed to be held, at a later date. The date for such a meeting should be
included in a future ROHN quarterly report on Form 10-Q. Stockholder proposals
for inclusion in proxy materials for such a meeting must be received within a
reasonable time before ROHN begins to print and mail its proxy materials.
ROHN's by-laws specify procedures for notifying the Secretary of ROHN of
business (including nominations for directors) to be properly brought before
any meeting of stockholders. A copy of the by-laws may be obtained from ROHN's
Secretary.
Representatives of Arthur Andersen LLP, ROHN's independent public
accountants, are expected to be present at the Annual Meeting with the
opportunity to make a statement if they so desire and to be available to
respond to appropriate questions.
At this time, the Board of Directors of ROHN is not aware of any other
matters to be presented for action at the Annual Meeting to be held on Monday,
March 22, 1999, other than those described above in this Proxy
Statement/Prospectus. If any other business should properly come before that
meeting, votes may be cast with respect to such matters in accordance with the
best judgment of the person or persons acting under the proxy.
WHERE YOU CAN FIND MORE INFORMATION
ROHN has filed with the SEC a registration statement under the Securities
Act of 1933 registering the ROHN shares to be issued to PiRod stockholders in
connection with the Merger. The registration statement, including exhibits and
schedules, contains additional relevant information about ROHN. The rules and
regulations of the SEC allow ROHN to omit certain information included in the
registration statement from this Proxy Statement/Prospectus.
In addition, ROHN files reports, proxy statements and other information with
the SEC under the Securities and Exchange Act of 1934. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. You may
read and copy this information at the following locations of the SEC.
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20539 New York, New York 10048 Suite 1400
Chicago, Illinois 60661
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. The SEC also maintains an Internet worldwide
web site that contains reports, proxy statements and other information about
issuers, like ROHN, who file electronically with the SEC. The address of that
site is http://www.sec.gov.
The SEC allows ROHN to "incorporate by reference" information into this
Proxy Statement/Prospectus. This means that ROHN can disclose important
information to you by referring you to another documented filed separately with
the SEC. The information incorporated by reference is considered to be a part
of this Proxy Statement/Prospectus, except for any information that is
superseded by information that is included directly in this document.
104
<PAGE>
This Proxy Statement/Prospectus incorporates by reference the documents
listed below that ROHN has previously filed with the SEC. They contain
important information about ROHN and its financial condition.
<TABLE>
<CAPTION>
ROHN Commission Filings
(File No. 1-8009) Description or Period/As of Date
- ----------------------- -------------------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Reports on Form
10-Q March 31, 1998; June 30, 1998; September 30, 1998
Current Report on Form 8-K December 28, 1998
</TABLE>
ROHN incorporates by reference additional documents that it may file with
the SEC between the date of this Proxy Statement/Prospectus and the date of the
Meeting. These documents include periodic reports such as Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
You may obtain any of the documents incorporated by reference in this
document through ROHN, or from the SEC through its worldwide web site at the
address described above. Documents incorporated by reference are available from
ROHN without charge, excluding any exhibits to those documents unless the
exhibit is specifically incorporated by reference in this Proxy
Statement/Prospectus. You can obtain documents incorporated by reference as an
exhibit in this Proxy Statement/Prospectus by requesting them in writing or by
telephone from ROHN at 6718 West Plank Road, Peoria, Illinois 61604, (309) 697-
4400.
If you would like to request documents, please do so by March 8, 1999, to
receive them before the Meeting. If you request any incorporated documents from
ROHN, ROHN will mail them to you by first class mail, or another equally prompt
means, within one business day after ROHN receives your request.
We have authorized no one to give you any information or to make any
representation about the Merger or ROHN or PiRod that differs from or adds to
the information contained in this document or in the documents publicly filed
with the Commission. Therefore, if anyone should give you any different or
additional information, you should not rely on it.
If you live in a jurisdiction where it is unlawful to offer the ROHN shares
offered by this document, or to ask for proxies, or if you are a person to whom
it is unlawful to direct such activities, then the offer presented by this
document does not extend to you.
The information contained in this document speaks only as of the date
indicated on the cover of this document unless the information specifically
indicates that another date applies.
With respect to the information contained in this document, ROHN has
supplied the information concerning ROHN and PiRod has supplied the information
concerning PiRod.
By Order of the Board of Directors
Timothy W. Kirk
Secretary
Peoria, Illinois
February , 1999
105
<PAGE>
Appendix A
AGREEMENT AND PLAN OF MERGER
BETWEEN
ROHN INDUSTRIES, INC.
AND
PIROD HOLDINGS, INC.
DATED AS OF DECEMBER 22, 1998
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1.The Merger.............................................................. A-5
1.1. Surviving Corporation........................................... A-5
1.2. Effective Time.................................................. A-5
1.3. Effect of the Merger............................................ A-5
1.4. Certificate of Incorporation; By-Laws........................... A-5
1.5. Directors and Officers.......................................... A-6
1.6. Conversion of Securities........................................ A-6
1.7. Fractional Shares............................................... A-9
1.8. Warrants of PIROD............................................... A-9
1.9. Options of PIROD................................................ A-10
1.10. ROHN Shareholder Meeting........................................ A-10
1.11. PIROD Shareholder Action........................................ A-11
1.12. Additional Actions.............................................. A-11
2.Closing................................................................. A-11
3.Representations and Warranties of ROHN.................................. A-11
3.1. Organization, Good Standing, etc................................ A-11
3.2. Authorized ROHN Shares, Absence of Options, Warrants, etc....... A-12
3.3. Effect of Agreement............................................. A-12
3.4. Contracts and Commitments....................................... A-13
3.5. SEC Filings; Financial Statements............................... A-13
3.6. Absence of Liabilities.......................................... A-14
3.7. Absence of Certain Changes or Events............................ A-14
3.8. Tax and Other Returns........................................... A-14
3.9. Employment Arrangements......................................... A-15
3.10. Property........................................................ A-15
3.11. Patents, Trademarks, etc........................................ A-15
3.12. Absence of Defaults by Others................................... A-15
3.13. Litigation...................................................... A-15
3.14. Disclosure Documents............................................ A-16
3.15. Brokers' and Finders' Fees...................................... A-16
3.16. Insurance....................................................... A-16
3.17. Pension, Retirement and Profit Sharing Plans.................... A-16
3.18. Environmental Matters........................................... A-17
3.19. Labor Matters................................................... A-17
3.20. Compliance with Laws and Court Orders........................... A-18
3.21. Licenses and Permits............................................ A-18
4.Representations and Warranties of PIROD................................. A-18
4.1. Organization, Good Standing, etc................................ A-18
4.2. Authorized Shares, Absence of Options, Warrants, etc............ A-18
4.3. Effect of Agreement............................................. A-19
4.4. Contracts and Commitments....................................... A-19
4.5. Financial Statements............................................ A-20
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
4.6. Absence of Liabilities.. A-20
Absence of Certain
4.7. Changes or Events....... A-20
4.8. Tax and Other Returns... A-21
4.9. Employment Arrangements. A-21
4.10. Property................ A-21
Patents, Trademarks,
4.11. etc..................... A-22
Absence of Defaults by
4.12. Others.................. A-22
4.13. Litigation.............. A-22
4.14. Disclosure Documents.... A-22
Brokers' and Finders'
4.15. Fees.................... A-22
4.16. Insurance............... A-22
Pension, Retirement and
4.17. Profit Sharing Plans.... A-23
4.18. Environmental Matters... A-23
4.19. Financing............... A-24
Ownership of ROHN
4.20. Shares.................. A-24
4.21. Labor Matters........... A-24
Compliance with Laws and
4.22. Court Orders............ A-24
4.23. Licenses and Permits.... A-24
5.Conduct and Transactions Prior
to Closing Date.................. A-24
Conduct of Business by
ROHN and PIROD Pending
5.1. the Closing Date........ A-24
Agreements of ROHN and
5.2. PIROD................... A-26
Reasonable Efforts;
5.3. Notification............ A-26
6.Conditions Precedent to the
Closing.......................... A-27
Conditions to the
Obligations of Both
6.1. Parties................. A-27
Conditions to the
6.2. Obligations of ROHN..... A-28
Conditions to the
6.3. Obligations of PIROD.... A-29
7.Amendment of Agreement; Waivers. A-29
7.1. Amendment............... A-29
7.2. Waiver.................. A-29
8.Termination..................... A-29
8.1. Termination............. A-29
Notice and Effect of
8.2. Termination............. A-30
9.Miscellaneous................... A-30
Procedure for
Termination, Amendment,
9.1. Extension or Waiver..... A-30
Survival of
Representations and
9.2. Warranties.............. A-30
9.3. Notices................. A-30
9.4. Expenses................ A-31
9.5. Headings................ A-31
Governing Law;
9.6. Jurisdiction............ A-31
9.7. Assignment.............. A-32
Officers' and Directors'
Insurance;
9.8. Indemnification......... A-32
ROHN and PIROD Material
9.9. Adverse Effect.......... A-32
9.10. Entire Agreement........ A-32
9.11. Confidentiality......... A-33
9.12. Knowledge............... A-33
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
Defined Term Section
- ------------ ----------
<S> <C>
Agreement...................... Preamble
Applicable PIROD Merger
Consideration................. 1.6.1
ASTs........................... 3.18.5
Bankruptcy Court............... 3.3
Cash Consideration............. 1.6.3(a)
Cash Election Number........... 1.6.4(a)
Cash Election Shares........... 1.6.3(a)
Cashed Shares.................. 1.6.6(a)
Certificate of Merger.......... 1.2
Closing........................ 2
Code........................... Preamble
D&O Insurance.................. 9.8.1
Effective Time................. 1.2
Election Date.................. 1.6.5(b)
Environmental Laws............. 3.18.1
ERISA.......................... 3.17
Exchange Act................... 3.14
Exchange Agent................. 1.6.5(b)
Exchange Fund.................. 1.6.6(a)
Financing Letter............... 4.19
Form of Election............... 1.6.5(b)
FTC............................ 3.3
GCL............................ 1.1
Governmental Entity............ 3.3
Hazardous Substance............ 3.18.3
HSR Act........................ 5.3.1
Jackson Exchange Warrant....... 1.8.1
Jackson Warrant................ 1.8.1
Justice........................ 3.3
Maximum Premium................ 9.8.1
Merger......................... Preamble
NASD........................... 3.3
Order.......................... 5.3.3
PCBs........................... 3.18.5
Permits........................ 3.21; 4.23
Plan of Reorganization......... 3.3
PIROD.......................... Preamble
PIROD's Balance Sheet.......... 4.6
PIROD Certificate.............. 1.6.1
PIROD Class A Shares........... 1.6.1
PIROD Class A-7 Warrant........ 1.8.3
PIROD Class L Warrants......... 1.8.2
PIROD Class L Shares........... 1.6.1
PIROD Financial Statements..... 4.5
PIROD Material Adverse Effect.. 9.9
PIROD Option................... 1.9
PIROD Plan..................... 4.17
PIROD Real Estate.............. 4.18.1
PIROD Schedule................. 4
PIROD Shares................... 1.6.1
</TABLE>
<TABLE>
<CAPTION>
Defined Term Section
- ------------ -----------
<S> <C>
PIROD Shareholders............ Preamble
PIROD Shareholders Voting
Agreement.................... Preamble
PIROD Stockholders Agreement.. 4.2
PIROD Warrant................. 1.8.4
Proration Factor.............. 1.6.4(b)(i)
Proxy Statement............... 1.8.2
RCRA.......................... 3.18.5
Retained ROHN Shares.......... 1.6.3(b)
ROHN.......................... Preamble
ROHN's Balance Sheet.......... 3.6
ROHN Certificate.............. 1.6.3(a)
ROHN A-7 Exchange Warrant..... 1.8.3
ROHN Class Exchange Warrant... 1.8.2
ROHN Exchange Options......... 1.9
ROHN Exchange Warrant......... 1.8.4
ROHN Material Adverse Effect.. 9.9
ROHN Meeting.................. 1.10.1
ROHN Options.................. 3.2
ROHN Plan..................... 3.17
ROHN Real Estate.............. 3.18.1
ROHN SEC Reports.............. 3.5
ROHN Schedule................. 3
ROHN Shares................... Preamble
ROHN Shareholders............. Preamble
ROHN Stockholders Agreement... Preamble
SEC........................... 1.6.5(b)
Securities Act................ 1.10.4
Superior Proposal............. 8.1.3(a)
Surviving Corporation......... 1.1
Takeover Proposal............. 5.1.8
10-K.......................... 3.5
10-Q.......................... 3.5
Trust......................... Preamble
Trust Voting Agreement........ Preamble
USTs.......................... 3.18.5
</TABLE>
A-4
<PAGE>
Agreement and Plan of Merger, dated as of December 22, 1998 (this
"Agreement"), between ROHN Industries, Inc., a Delaware corporation ("ROHN"),
and PiRod Holdings, Inc., a Delaware corporation ("PIROD").
Whereas, the respective boards of directors of ROHN and PIROD have approved
the merger of ROHN and PIROD upon the terms and subject to the conditions set
forth in this Agreement (the "Merger");
Whereas, in furtherance of the Merger, the boards of directors of ROHN and
PIROD have adopted resolutions approving the Merger, the voting agreements
(described below), and recommending that ROHN's stockholders (the "ROHN
Shareholders") and PIROD's stockholders (the "PIROD Shareholders"),
respectively, vote to approve the Merger;
Whereas, the Merger is intended to qualify as a reorganization under Section
368(a)(1)(A) of the Internal Revenue Code (the "Code") with respect to the
PIROD Shareholders and to be treated under the Code as a redemption of certain
shares of ROHN common stock, $.01 par value ("ROHN Shares") from certain ROHN
Shareholders;
Whereas, concurrently with the execution of this Agreement and as an
inducement to ROHN and PIROD to enter into this Agreement, PIROD and the UNR
Asbestos-Disease Claims Trust (the "Trust"), are entering into a voting
agreement of even date herewith (the "Trust Voting Agreement") and ROHN and
certain PIROD Shareholders are entering into a voting agreement of even date
herewith (the "PIROD Shareholders Voting Agreement") pursuant to which the
Trust and certain PIROD Shareholders have agreed, upon the terms and subject to
the conditions set forth therein, to vote in favor of the Merger; and
Whereas, concurrently with the execution of this Agreement, the Trust and
all the PIROD Shareholders are entering into a Stockholders Agreement of even
date herewith (the "ROHN Stockholders Agreement") pursuant to which the parties
have agreed to certain matters following the Merger;
Now, therefore, the parties hereto agree as follows:
1. The Merger.
1.1. Surviving Corporation. Upon the terms and subject to the conditions set
forth in Section 6, and in accordance with the Delaware General Corporation Law
(the "GCL"), at the Effective Time (as defined in Section 1.2) PIROD shall be
merged with and into ROHN. As a result of the Merger, the separate corporate
existence of PIROD shall cease and ROHN shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
1.2. Effective Time. As promptly as practicable after the satisfaction or,
if permissible, waiver of the conditions set forth in Section 6, the parties
hereto shall cause the Merger to be consummated by filing a Certificate of
Merger with the Secretary of State of the State of Delaware (the "Certificate
of Merger") in such form as required by, and executed in accordance with the
relevant provisions of, the GCL (the date and time of such filing being (the
"Effective Time").
1.3. Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the GCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of ROHN and PIROD shall
vest in the Surviving Corporation, and all debts, liabilities and duties of
ROHN and PIROD shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4. Certificate of Incorporation; By-Laws.
1.4.1 The Certificate of Incorporation of ROHN shall be the Certificate
of Incorporation of the Surviving Corporation until thereafter amended as
provided by law and such Certificate of Incorporation.
A-5
<PAGE>
1.4.2 The By-Laws of ROHN shall be amended and restated, effective as of
the Effective Time, as set forth in Exhibit 1.4.2 hereto. The By-Laws of
ROHN, as so amended and restated, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by law, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
1.5. Directors and Officers. The initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Surviving Corporation, shall be the directors (determined in accordance with
the ROHN Stockholders Agreement) and officers of ROHN, respectively, in each
case to serve until their respective successors are duly elected or appointed
and qualified.
1.6. Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of PIROD, ROHN, or the holders of any
of the following securities:
1.6.1. Common Stock of PIROD. All of the shares of Class A common stock,
$0.001 par value per share, of PIROD (the "PIROD Class A Shares") issued
and outstanding immediately prior to the Effective Time shall be converted
into the right to receive 3.7282 ROHN Shares and all of the shares of Class
L common stock, $0.001 par value per share, of PIROD (the "PIROD Class L
Shares") issued and outstanding immediately prior to the Effective Time
shall be converted into the right to receive 61.6859 ROHN Shares (the
"Applicable PIROD Merger Consideration"). The PIROD Class A Shares and the
PIROD Class L Shares are referred to collectively herein as the "PIROD
Shares." Exhibit 1.6.1 hereto lists the aggregate number of ROHN Shares
that each holder of PIROD Shares will be entitled to receive upon
consummation of the Merger. All PIROD Shares so converted into the right to
receive the Applicable PIROD Merger Consideration shall no longer be
outstanding, shall automatically be cancelled and retired and shall cease
to exist, and each holder of a certificate representing any such PIROD
Shares (a "PIROD Certificate") shall, to the extent such PIROD Certificate
represents PIROD Shares, cease to have any rights with respect thereto,
except the right to receive the Applicable PIROD Merger Consideration upon
surrender of the PIROD Certificate in accordance with Section 1.6.6.
1.6.2. Cancellation of Treasury Stock. Each PIROD Share that is owned by
PIROD or by any wholly-owned subsidiary of PIROD, and each ROHN Share that
is owned by ROHN or any wholly-owned subsidiary of ROHN, shall
automatically be canceled and retired and shall cease to exist, and no cash
or other consideration shall be delivered or deliverable in exchange
therefor.
1.6.3. Retention or Exchange of ROHN Shares. Except as otherwise
provided herein and subject to Sections 1.6.4 and 1.6.5, each ROHN Share
issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger, be treated as follows:
(a) each ROHN Share with respect to which an election to receive
$3.78 in cash (the "Cash Consideration") has been made and not revoked
in accordance with Section 1.6.5 (the "Cash Election Shares") shall be
converted into the right to receive the Cash Consideration. All ROHN
Shares so converted into the right to receive the Cash Consideration
shall no longer be outstanding, shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate
representing any such ROHN Shares (a "ROHN Certificate") shall cease to
have any rights with respect thereto.
(b) each other ROHN Share (the "Retained ROHN Shares") shall be
retained by the holder thereof.
1.6.4. Proration.
(a) Notwithstanding anything in this Agreement to the contrary, the
aggregate number of ROHN Shares (the "Cash Election Number") to be
converted into the right to receive the Cash Consideration shall be equal
to that number obtained by dividing the Available Cash by $3.78. For
purposes of this Section 1.6.4(a), Available Cash shall be equal to the
least of: (A) $105.0 million; (B) the product of $3.78 multiplied by the
total number of Cash Election Shares; and (C) the total borrowings made
available to the
A-6
<PAGE>
Surviving Corporation at the Effective Time under its senior credit
agreement for the purpose of paying the Cash Consideration plus (ii) $12.8
million, minus the sum of (a) the total amount of indebtedness of ROHN and
PIROD to be repaid in connection with the Merger, including any and all
accrued but unpaid interest thereon, premiums and prepayment penalties, if
any, (b) the good faith estimate of the amount of fees and expenses
incurred by ROHN and PIROD in connection with the Merger and the
transactions contemplated thereby (including all investment banking, legal
and accounting fees and expenses); and (c) the difference, if any, between
the amount of cash-on-hand of the Surviving Corporation at the Effective
Time and $12.8 million (but only to the extent such amount of cash-on-hand
is less than $12.8 million).
(b) If the number of Cash Election Shares is greater than the Cash
Election Number, then each Cash Election Share shall (i) receive the Cash
Consideration in accordance with the terms of Section 1.6.3(a) or (b) be
retained as a Retained ROHN Share in accordance with the terms of Section
1.6.3(b) in the following manner:
(i) A proration factor (the "Proration Factor") shall be determined
by dividing the Cash Election Number by the total number of Cash
Election Shares.
(ii) The number of Cash Election Shares converted into the right to
receive cash in accordance with the terms of Section 1.6.3(a) shall be
determined by multiplying the Proration Factor by the total number of
Cash Election Shares covered by such election, rounded down to the
nearest whole number.
(iii) All Cash Election Shares, other than those shares that shall
receive cash in accordance with Section 1.6.4(b)(ii), shall be deemed
to be Retained ROHN Shares (on a consistent basis among ROHN
Shareholders who made the election referred to in Section 1.6.3(a), pro
rata to the number of ROHN Shares as to which they made such election).
1.6.5. Election Procedures.
(a) Each person who, on or prior to the Election Date (as defined in
Section 1.6.5(b) below), is a record holder of ROHN Shares will be
entitled, subject to Section 1.6.4 hereof, to make an unconditional
election on or prior to such Election Date specifying the number of ROHN
Shares which he desires to have converted into the right to receive the
Cash Consideration.
(b) Subject to any required clearance by the Securities and Exchange
Commission (the "SEC"), ROHN shall prepare a form of election (the "Form of
Election"), which form shall be subject to the reasonable approval of
PIROD, to be mailed by ROHN with the Proxy Statement (as defined below) to
the record holders of ROHN Shares as of the record date for ROHN
Shareholder Meeting (as defined below), which Form of Election shall be
used by each record holder of ROHN Shares who elects to specify the number
of ROHN Shares which he desires to have converted into the right to receive
the Cash Consideration in the Merger, subject to the provisions of Section
1.6.4 hereof. ROHN will use its commercially reasonable best efforts to
make the Form of Election available to all persons who become holders of
ROHN Shares during the period between such record date and the Election
Date, with a copy of the Proxy Statement. Any such holder's election shall
have been properly made only if such bank or trust company as shall be
mutually acceptable to ROHN and PIROD, acting as exchange agent (the
"Exchange Agent") shall have received at its designated office, by 5:00
p.m., New York City time on the business day immediately prior to the date
of the ROHN Shareholder Meeting (the "Election Date"), a Form of Election
properly completed and signed and accompanied by ROHN Certificates to which
such Form of Election relates, duly endorsed in blank or otherwise in a
form acceptable for transfer on the books of ROHN (or by an appropriate
guarantee of delivery of such ROHN Certificates as set forth in such Form
of Election from a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc. or a commercial bank or trust company having an office or
correspondent in the United States, provided such ROHN Certificates are in
fact delivered to the Exchange Agent within three New York Stock Exchange
trading days after the date of execution of such guarantee of delivery).
A-7
<PAGE>
(c) Any Form of Election may be revoked by the holder submitting it to
the Exchange Agent only by written notice received by the Exchange Agent
(i) prior to 5:00 p.m., New York City time on the Election Date or (ii)
after the Election Date, if ROHN and PIROD determine, on or prior to the
Election Date, that the Closing (as hereinafter defined) is not likely to
occur within three business days following the Election Date, in which case
any Form of Election shall remain revocable until a subsequent date which
shall be a date prior to the Closing determined by ROHN and PIROD. In
addition, all Forms of Election shall automatically be revoked if the
Exchange Agent is notified in writing by ROHN and PIROD that the Merger
Agreement has been terminated. If a Form of Election is revoked, the ROHN
Certificates (or guarantees of delivery, as appropriate) to which such Form
of Election relates shall be promptly returned to the ROHN Shareholder
submitting the same to the Exchange Agent.
(d) The determination of the Exchange Agent shall be binding with
respect to whether or not elections have been properly made or revoked
pursuant to this Section 1.6.5 and when elections and revocations were
received by it. If the Exchange Agent determines that any election was not
properly made, such ROHN Shares shall be treated by the Exchange Agent as
Retained ROHN Shares. The Exchange Agent shall also make all computations
as to the allocation and the proration contemplated by Section 1.6.4, and
any such computation shall be conclusive and binding on the holders of ROHN
Shares. The Exchange Agent may, with the mutual agreement of ROHN and
PIROD, make such rules as are consistent with this Section 1.6.5 for the
implementation of the elections provided for herein as shall be necessary
or desirable fully to effect such elections.
1.6.6. Exchange or Retention of ROHN Shares; Exchange of PIROD Shares.
(a) By the Effective Time, ROHN and PIROD shall take all steps necessary
to cause to be deposited on a timely basis with the Exchange Agent in an
account (the "Exchange Fund") the Cash Consideration to which holders of
ROHN Shares shall be entitled at the Effective Time pursuant to Section
1.6.3(a) and Section 1.6.4(b) (the "Cashed Shares").
(b) Promptly after the Effective Time, ROHN shall cause the Exchange
Agent to mail to each record holder of a PIROD Certificate a form of letter
of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to such PIROD Certificates shall pass, only upon
proper delivery of such PIROD Certificates to the Exchange Agent and
instructions for use in surrendering such PIROD Certificates and receiving
the Applicable PIROD Merger Consideration in respect thereof.
(c) Promptly after the Effective Time, the Exchange Agent shall pay to
the record holder on the Election Date of ROHN Certificates that
represented Cashed Shares the Cash Consideration multiplied by the number
of Cashed Shares, in consideration therefor. Upon such payment, such ROHN
Certificate shall forthwith be cancelled. Promptly after the Effective
Time, ROHN shall also cause the Exchange Agent to mail to each record
holder a certificate for the Cash Election Shares which are deemed to be
Retained ROHN Shares pursuant to Section 1.6.4(b)(iii) hereof.
(d) If the Cash Consideration (or any portion thereof) is to be
delivered to any person other than the person in whose name the ROHN
Certificate surrendered is registered, it shall be a condition to such
right to receive such Cash Consideration that the ROHN Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person surrendering such ROHN Certificate shall pay
to the Exchange Agent any transfer or other taxes required by reason of the
payment of the Cash Consideration to a person other than the registered
holder of the ROHN Certificate surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable.
(e) Until surrendered in accordance with Section 1.6.6(b), each PIROD
Certificate (other than PIROD Certificates representing PIROD Shares held
in the treasury of PIROD or by any wholly-owned subsidiary of PIROD) shall
represent solely the right to receive the Applicable PIROD Merger
Consideration relating thereto. If the Applicable PIROD Merger
Consideration is to be delivered to any person other than the person in
whose name the PIROD Certificate surrendered is registered, it shall be a
condition to such right to receive such Applicable PIROD Merger
Consideration that the PIROD Certificate so surrendered shall
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be properly endorsed or otherwise be in proper form for transfer and that
the person surrendering such PIROD Certificate shall pay to the Exchange
Agent any transfer or other taxes required by reason of the payment of the
Applicable PIROD Merger Consideration to a person other than the registered
holder of the Certificate surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable.
(f) Promptly following the date which is six months after the Effective
Time, the Exchange Agent shall deliver to the Surviving Corporation all
cash, securities and other documents in its possession relating to the
transactions described in the Agreement, and the Exchange Agent's duties
shall terminate. Thereafter, each holder of a PIROD Certificate may
surrender such PIROD Certificate to ROHN and (subject to applicable
abandoned property, escheat and similar laws) receive in consideration
therefor the Applicable PIROD Merger Consideration related thereto, without
any interest thereon.
(g) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation or of PIROD of any ROHN or
PIROD Shares which were outstanding immediately prior to the Effective Time
and, in the case of ROHN Shares, which were entitled to the Cash
Consideration. If, after the Effective Time, certificates formerly
representing PIROD Shares are presented to ROHN or the Exchange Agent for
exchange for the Applicable PIROD Merger Consideration, they shall be
surrendered and cancelled in return for the payment of the Applicable PIROD
Merger Consideration relating thereto.
(h) None of ROHN, PIROD or the Exchange Agent shall be liable to any
person in respect of any Cash Consideration or Applicable PIROD Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any PIROD Certificates shall
not have been surrendered prior to seven years after the Effective Time (or
immediately prior to such earlier date on which the Applicable PIROD Merger
Consideration would otherwise escheat to or become the property of any
governmental entity), any such distributions or cash in respect of such
PIROD Certificate shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto.
1.7. Fractional Shares. No certificate or script representing fractional
ROHN Shares shall be issued upon the surrender for exchange of PIROD
Certificates, no dividend or distribution of ROHN shall relate to such
fractional share interests and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of ROHN. Any
fractional ROHN Share interests will be settled in cash by the Exchange Agent
from funds made available to it by ROHN or PIROD, such cash to be equal to the
fraction of a ROHN Share to which the party surrendering a PIROD Certificate
would otherwise be entitled times the average reported closing price for ROHN
Shares on the Nasdaq National Market System on the five trading days preceding
the Closing.
1.8. Warrants of PIROD.
1.8.1 The Jackson Warrant. The outstanding warrant for PIROD Class L
Shares issued to Jackson National Life Insurance Company (the "Jackson
Warrant") shall be converted into a warrant (the "Jackson Exchange
Warrant") to purchase that number of ROHN Shares equal to 61.6859 times the
number of Class L PIROD Shares purchasable under the Jackson Warrant
immediately prior to the Effective Time (without regard to actual
restrictions on exercisability), and with other terms and conditions that
are the same as the terms and conditions of such Jackson Warrant
immediately before the Effective Time; provided, however, that the exercise
price to purchase each ROHN Share under the Jackson Exchange Warrant will
be adjusted so that the aggregate exercise price of all ROHN Shares under
such Jackson Exchange Warrant is equal to the aggregate price of all PIROD
Class L Shares under the Jackson Warrant so converted.
1.8.2 Other Class L Warrants. Each of the outstanding warrants for Class
L Shares other than the Jackson Warrant (each a "PIROD Class L Warrant")
shall be converted into a warrant (each a "ROHN Class L Exchange Warrant")
to purchase that number of ROHN Shares equal to 46.5854 times the number of
Class L PIROD Shares purchasable under the PIROD Class L Warrant
immediately prior to the
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Effective Time (without regard to actual restrictions on exercisability),
and with other terms and conditions that are the same as the terms and
conditions of such PIROD Class L Warrant immediately before the Effective
Time; provided, however, that the exercise price to purchase each ROHN
Share under the ROHN Class L Exchange Warrant will be adjusted so that the
aggregate exercise price of all ROHN Shares under such ROHN Class L
Exchange Warrant is equal to the aggregate price of all PIROD Class L
Shares under the PIROD Class L Warrant so converted.
1.8.3 Class A-7 Warrants. The outstanding warrant for PIROD Class A-7
Shares (the "PIROD
A-7 Warrant") shall be converted into a warrant (the "ROHN A-7 Exchange
Warrant") to purchase that number of ROHN Shares equal to 3.7282 times the
number of Class A-7 PIROD Shares purchasable under the PIROD A-7 Warrant
immediately prior to the Effective Time (without regard to actual
restrictions on exercisability), and with other terms and conditions that
are the same as the terms and conditions of such PIROD A-7 Warrant
immediately before the Effective Time; provided, however, that the exercise
price to purchase each ROHN Share under the ROHN A-7 Exchange Warrant will
be adjusted so that the aggregate exercise price of all ROHN Shares under
such ROHN A-7 Exchange Warrant is equal to the aggregate price of all PIROD
Class A-7 Shares under the PIROD A-7 Warrant so converted.
1.8.4 General. The Jackson Warrant, the PIROD Class L Warrants and the
PIROD Class A-7 Warrant are collectively referred to as the "PIROD
Warrants". The Jackson Exchange Warrant, the ROHN Class L Exchange Warrants
and the ROHN A-7 Exchange Warrant are each referred to as a "ROHN Exchange
Warrant". Exhibit 1.8.4 hereto lists the number of ROHN Shares, and the
exercise price per share thereof, that will be issuable pursuant to each
ROHN Exchange Warrant to be issued in connection with Merger upon
conversion of the PIROD Warrants. In connection with the issuance of the
ROHN Exchange Warrants, ROHN shall (i) reserve for issuance the number of
ROHN Shares that will in the aggregate become subject to the ROHN Exchange
Warrants pursuant to this Section 1.8 and (ii) from and after the Effective
Time, upon the exercise of the ROHN Exchange Warrants, make available for
issuance all ROHN shares covered thereby, subject to the terms and
conditions applicable thereto.
1.9. Options of PIROD. Each of the outstanding stock options issued under
PIROD's 1997 Stock Option Plan (each a "PIROD Option") shall be converted into
an option (each a "ROHN Exchange Option") to purchase that number of ROHN
Shares equal to the Applicable PIROD Merger Consideration times the number of
PIROD Shares of the applicable class purchasable under the PIROD Option
immediately prior to the Effective Time (without regard to actual restrictions
on exercisability), and with other terms and conditions that are the same as
the terms and conditions of such PIROD Option immediately before the Effective
Time; provided, however, that the exercise price to purchase each ROHN Share
under a ROHN Exchange Option will be adjusted so that the aggregate exercise
price of all ROHN Shares under such ROHN Exchange Option is equal to the
aggregate exercise price of all PIROD Shares under the PIROD Option so
converted. Exhibit 1.9 hereto lists the number of ROHN Shares, and the
exercise price per share thereof, that will be issuable pursuant to each ROHN
Exchange Option to be issued in connection with the Merger. The ROHN Exchange
Options shall satisfy the provisions of Section 424(a) of the Code. In
connection with the issuance of the ROHN Exchange Options, ROHN shall (i)
reserve for issuance the number of ROHN Shares that will become subject to the
ROHN Exchange Options pursuant to this Section 1.9 and (ii) from and after the
Effective Time, upon the exercise of the ROHN Exchange Options, make available
for issuance all ROHN Shares covered thereby, subject to the terms and
conditions applicable thereto.
1.10. ROHN Shareholder Meeting. ROHN, acting through its board of
directors, shall, in accordance with applicable law:
1.10.1. duly call, give notice of, convene and hold an annual or special
meeting of ROHN Shareholders (the "ROHN Meeting") as soon as practicable
for the purpose of approving and adopting this Agreement;
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1.10.2. subject to a determination in good faith by ROHN's board of
directors of its fiduciary duties under applicable law, include in the
proxy statement for, or any information statement with respect to, the ROHN
Meeting (the "Proxy Statement") the recommendation of its board of
directors that ROHN Shareholders vote in favor of the approval and adoption
of this Agreement; and
1.10.3. use all commercially reasonable best efforts (i) to obtain and
furnish the information required to be included by it in the Proxy
Statement, and, after consultation with PIROD, respond promptly to any
comments made by the SEC with respect to the Proxy Statement and any
preliminary version of the Proxy Statement and cause the Proxy Statement to
be mailed to ROHN Shareholders at the earliest practicable time, and (ii)
subject to the fiduciary duties of the board of directors under applicable
law, to obtain the necessary approval of the Merger by ROHN Shareholders.
1.10.4 use commercially reasonable best efforts to prepare and file with
the SEC, and have declared effective by the SEC, a registration statement
on Form S-4 registering under the Securities Act of 1933 (the "Securities
Act") the ROHN Shares issuable in the Merger.
1.11. PIROD Shareholder Action. PIROD shall cause the PIROD Shareholders to
take all action necessary, in accordance with applicable law, to approve this
Agreement as soon as reasonably practicable.
1.12. Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable
(a) to vest, perfect or confirm in the Surviving Corporation its right, title
or interest in, to or under any of the rights, properties or assets of ROHN or
PIROD or (b) to otherwise carry out the provisions of this Agreement, each of
ROHN and PIROD and its directors and officers shall be deemed to have granted
to such Surviving Corporation an irrevocable power of attorney to execute and
deliver all such deeds, assignments or assurances in law and to take all acts
necessary, proper or desirable to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving Corporation
and otherwise to carry out the provisions of this Agreement, and the directors
and officers of the Surviving Corporation are authorized in the name of ROHN
and PIROD, as the case may be, or otherwise to take any and all such action.
2. Closing.
Immediately preceding and consummating with the filing of the Certificate of
Merger referred to in Section 1.2, a closing (the "Closing") shall take place
at such date, time and place, subject to Section 9 hereof, as the parties may
agree upon as soon as practicable after the satisfaction of the conditions (or
due waiver thereof) set forth in Section 6. The time and date of the Closing
are referred to in this Agreement as the Closing Date.
3. Representations and Warranties of ROHN.
ROHN represents and warrants (except as set forth in the 10-K or 10-Q, as
herein defined, or in that certain schedule dated the date hereof (the "ROHN
Schedule") and delivered to PIROD prior to the execution hereof) that:
3.1. Organization, Good Standing, etc. ROHN and each of its subsidiaries are
corporations duly organized, validly existing and in good standing under the
laws of the respective states of their incorporation, have all requisite power
to own their properties and to carry on their businesses as now being conducted
and are duly qualified to do business and are in good standing in all other
jurisdictions in which qualification as a foreign corporation is required,
except for such failure to be qualified and in good standing, if any, which
when taken together with all other such failures of ROHN and its subsidiaries
would not in the aggregate have a ROHN Material Adverse Effect (as defined in
Section 9.9). Each such corporation, state or country of incorporation and
jurisdiction is set forth in Section 3.1 of the ROHN Schedule. ROHN has
heretofore made available to PIROD a complete and correct copy of the
Certificate of Incorporation and the By-Laws or
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equivalent organizational documents, each as amended to the date of this
Agreement, of ROHN and each of its subsidiaries. Such Certificates of
Incorporation, By-Laws and equivalent organizational documents are in full
force and effect. Neither ROHN nor any subsidiary is in violation of any
provision of its Certificate of Incorporation, By-Laws or equivalent
organizational documents, except for such violations that would not,
individually or in the aggregate, have a ROHN Material Adverse Effect.
3.2. Authorized ROHN Shares, Absence of Options, Warrants, etc. The
authorized capital stock of ROHN consists of 60,000,000 ROHN Shares, of which
52,816,009 ROHN Shares are issued and outstanding as of the date of this
Agreement and 635,016 ROHN Shares are held in its treasury. All of the
outstanding ROHN Shares are, and all ROHN Shares issuable upon due exercise of
outstanding employee stock options ("ROHN Options") will be, when issued in
accordance with the terms of the ROHN Options, duly authorized, validly issued,
fully paid and nonassessable by ROHN. There are no voting trusts or other
agreements or understandings with respect to the voting of any ROHN Shares
known to ROHN (other than the Trust Voting Agreement); and there are no
outstanding options, warrants, calls, rights of conversion or exchange or other
rights, commitments or agreements of any character relating to the authorized
or issued ROHN Shares known to ROHN, except for the exercise rights of the
holders of ROHN Options with respect to a maximum of 1,160,000 ROHN Shares,
agreements with respect to a maximum of 280,000 ROHN Shares issued pursuant to
Restricted Stock Agreements, which ROHN Options (with numbers of ROHN Shares,
exercise prices, holders and duration) and Restricted Stock Agreements (with
the number of ROHN Shares covered by each agreement and parties thereto) are
set forth on Section 3.3 of the ROHN Schedule, and the need for Bankruptcy
Court approval of a sale of the Shares by the Trust as noted in Section 3.3
below. ROHN is the owner of all outstanding capital stock of each of its
subsidiaries; no capital stock of any of such subsidiaries is held in the
treasury of any of such subsidiaries; there are no other shares of capital
stock of any class of any of such subsidiaries reserved for issuance as of the
date of this Agreement; there are no voting trusts or other agreements or
understandings with respect to the voting of any of the equity securities of
such subsidiaries; and there are no outstanding options, warrants, calls,
rights of conversion or exchange or other rights, commitments or agreements of
any character relating to equity securities of any of such subsidiaries. All
such capital stock has been duly authorized and validly issued and is fully
paid and non-assessable. Section 3.2 of the ROHN Schedule lists all stocks,
bonds, debentures and other interests in or securities of such subsidiaries and
of other business enterprises owned by ROHN or any of its subsidiaries.
3.3. Effect of Agreement. The execution, delivery and performance by ROHN of
this Agreement and the consummation by ROHN of the transactions contemplated
hereby are within ROHN's corporate powers and, except for any required approval
by the ROHN Shareholders by majority vote in connection with the consummation
of the Merger, have been duly authorized by all necessary corporate and
stockholder action. This Agreement constitutes a valid and binding agreement of
ROHN, enforceable against ROHN in accordance with its terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar law affecting creditors' rights generally and general principles of
equity. The execution and delivery of this Agreement by ROHN and the
consummation of the Merger have been duly authorized by the board of directors
of ROHN, do not require the consent, approval or authorization of or filing
with any person or any Federal, state or local government or any court,
administrative agency or commission or other domestic or foreign governmental
authority or agency (a "Governmental Entity") other than the approval of ROHN
Shareholders at the ROHN Shareholder Meeting, the filing of the Certificate of
Merger contemplated by Section 1.2, the filings with the SEC, the National
Association of Securities Dealers, Inc. ("NASD"), the Federal Trade Commission
(the "FTC") and the U.S. Department of Justice ("Justice") contemplated by
Section 5.3.1, the approval of the sale of ROHN Shares held by the Trust by the
United States Bankruptcy Court for Northern District of Illinois, Eastern
Division (the "Bankruptcy Court") as provided in the Consolidated Plan of
Reorganization dated March 14, 1989 (the "Plan of Reorganization") and the
consents, waivers or approvals from persons party to specified contracts listed
in Section 3.3 of the ROHN Schedule and will not, subject to obtaining the
aforesaid consents, waivers or approvals and making the aforesaid filings, and
except such as would not reasonably be expected to have a ROHN Material Adverse
Effect, violate any law, statute, regulation, injunction, order or decree of
any governmental agency or authority or court, or conflict
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with or result in a breach of or constitute a default under any of the terms or
provisions of any mortgage, note, bond or indenture or material obligation to
which ROHN or any of its subsidiaries is a party or by which it or any of its
or their properties may be bound. Subject to securing the consents, waivers and
approvals required under the agreements set forth in Section 3.3 of the ROHN
Schedule, the execution and delivery of this Agreement by ROHN and the
consummation of the Merger will not give to others any interests or rights,
including rights of termination or cancellation, in or with respect to any
material property, asset, contract, agreement, license or other commitment or
instrument of ROHN or any of its subsidiaries, except as would not reasonably
be expected to have a ROHN Material Adverse Effect.
3.4. Contracts and Commitments. Neither ROHN nor any of its subsidiaries is
in breach or violation of or in default (i) under any of the terms or
provisions of any mortgages, leases, notes, bonds, indentures, commitments,
contracts, agreements, licenses or other instruments to which such corporation
is a party or by which it or any of its properties is bound and which is listed
in Section 3.4 of the ROHN Schedule or which singularly is or in the aggregate
are otherwise material to the business, properties, financial condition or
operations of such corporation, (ii) under any law, judgment or decree, or any
order, rule or regulation applicable to such corporation or to any of its
properties or (iii) in the payment of any of its obligations for borrowed
funds, and there exists no known condition or known event which, after notice
or lapse of time or both, would constitute a default in connection with any of
the foregoing, except any such breach, violation or default that would not
reasonably be expected to have a ROHN Material Adverse Effect. Section 3.4 of
the ROHN Schedule contains a correct and complete list of the following: (i)
each loan, credit agreement, guarantee, indenture, note, mortgage, security
agreement or similar document or instrument to which ROHN or any of its
subsidiaries is a party or by which any of ROHN's or any of its subsidiaries'
assets or properties are bound; (ii) each lease of personal property to which
ROHN or any of its subsidiaries is a party or by which any of ROHN or its
subsidiaries are bound; and (iii) any other agreement, contract or commitment
to which ROHN or any of its subsidiaries is a party or by which any of ROHN's
or any of its subsidiaries' assets or properties are bound which is a
collective bargaining agreement or which involves a future commitment by ROHN
or any of its subsidiaries in excess of $25,000 and which cannot be terminated
without liability on 90 days or less notice (the "ROHN Material Contracts").
ROHN has delivered to PIROD a true and complete copy of each of the ROHN
Material Contracts. Each of the ROHN Material Contracts is a valid and binding
obligation of ROHN or its subsidiary, as applicable, enforceable in accordance
with its terms, and is in full force and effect, subject to bankruptcy,
reorganization, receivership and other laws affecting creditors' rights
generally.
3.5. SEC Filings; Financial Statements. ROHN has filed all forms, reports,
registrations, proxy statements, schedules and documents required to be filed
by it with the SEC since January 1, 1996 and has heretofore made available to
PIROD, in the form filed with the SEC (excluding any exhibits thereto), (i) its
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (the
"10-K"), (ii) its Quarterly Reports on Form 10-Q for the periods ended March
31, 1998, June 30, 1998 and September 30, 1998 (the last such Report referred
to as the "10-Q"), (iii) all proxy statements relating to ROHN's meetings of
stockholders (whether annual or special) held since January 1, 1996 and (iv)
all other forms, reports, other registration statements and schedules (other
than the quarterly reports not referred to in clause (ii) above and preliminary
materials) filed by ROHN with the SEC since January 1, 1996 (the forms, reports
and other documents referred to in clauses (i), (ii), (iii) and (iv) above
being referred to herein collectively, as the "ROHN SEC Reports"). The ROHN SEC
Reports and any forms, reports and other documents filed by ROHN with the SEC
after the date of this Agreement (x) were prepared in accordance with the
requirements of the Securities Act and the Exchange Act, as the case may be,
and the rules and regulations thereunder and (y) did not at the time they were
filed contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of circumstances under which they were
made, not misleading. Except to the extent that the information contained in
the ROHN SEC Reports has been revised or superseded by a later filed ROHN SEC
Report, the ROHN SEC Reports do not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. No subsidiary of ROHN
is required to file any form, report or other document with the SEC. The
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financial statements contained in the 10-K and the 10-Q fairly present the
consolidated financial condition of ROHN and all its subsidiaries as at the
dates thereof and the consolidated results of operations and changes in
financial position for the periods indicated, all in conformity with generally
accepted accounting principles applied on a consistent basis (except as
otherwise stated therein or, in the case of unaudited financial statements, as
permitted by Form 10-Q). For the purposes of this Agreement, all financial
statements of ROHN shall be deemed to include any notes to such financial
statements.
3.6. Absence of Liabilities. Except for liabilities or obligations which
would not reasonably be expected to have a ROHN Material Adverse Effect,
neither ROHN nor any of its subsidiaries has any material liabilities or
obligations, either accrued, absolute, contingent or otherwise, which have not
been (i) reflected in ROHN's Balance Sheet as of September 30, 1998, referred
to in Section 3.5 ("ROHN's Balance Sheet"), (ii) specifically described in
Section 3.6 of the ROHN Schedule, (iii) incurred in the ordinary course of
ROHN's business since September 30, 1998, or (iv) incurred under or in
connection with this Agreement.
3.7. Absence of Certain Changes or Events. Since September 30, 1998, except
as disclosed in Section 3.7 of the ROHN Schedule, (i) neither ROHN nor any of
its subsidiaries has sustained any damage, destruction or loss by reason of
fire, flood, accident or other calamity (whether or not covered by insurance)
that would reasonably be expected to have a ROHN Material Adverse Effect; (ii)
there have been no changes in the condition (financial or otherwise), business,
net worth, assets, properties, obligations or liabilities (fixed or contingent)
of ROHN or any of its subsidiaries that would reasonably be expected to have a
ROHN Material Adverse Effect; (iii) neither ROHN nor any of its subsidiaries
has incurred any obligation for the payment of money extending more than one
year, except for operating leases entered into in the ordinary course of
business; (iv) neither ROHN nor any of its subsidiaries has paid any obligation
or liability (fixed or contingent) except current liabilities included in
ROHN's Balance Sheet and current liabilities incurred since September 30, 1998
in the ordinary course of business or pursuant to the terms of this Agreement;
(v) ROHN has not declared any other dividend or other distribution on or with
respect to any ROHN Shares; (vi) ROHN has not purchased, redeemed or otherwise
acquired for a consideration, directly or indirectly, any ROHN Shares or other
securities of ROHN; (vii) neither ROHN nor any of its subsidiaries has disposed
of, or agreed to dispose of, any material property or asset, other than in the
ordinary course of business and for a consideration at least equal to the fair
value of such property or asset, nor has it leased to others, or agreed so to
lease, any property or asset except in the ordinary course of business and for
a consideration at least equal to the fair rental value of such property or
asset; (viii) neither ROHN nor any of its subsidiaries has made any
expenditures or commitments for the purchase, acquisition, construction or
improvement of a capital asset except in the ordinary course of business and in
an aggregate amount not exceeding $500,000; (ix) neither ROHN nor any of its
subsidiaries has amended its Certificate or Articles of Incorporation or By-
Laws; (x) neither ROHN nor any of its subsidiaries has (A) granted any
severance or termination pay to any director, officer or employee of ROHN or
any subsidiary, (B) entered into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
director, officer or employee of ROHN or any subsidiary, (C) increased benefits
payable under any existing severance or termination pay policies or employment
agreements, (D) increased compensation, bonus or other benefits payable to
directors, officers or employees of ROHN or any subsidiary or (E) entered into
any new, or amended or modified any existing, collective bargaining agreement;
(xi) ROHN has not effected any split, combination or reclassification of any
shares of its outstanding capital stock or any issuance or the authorization of
any issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (xii) neither ROHN nor any of its
subsidiaries has made any change in accounting methods, principles or practices
by ROHN or its subsidiaries materially affecting the consolidated assets,
liabilities or results of operations of ROHN or its subsidiaries, except
insofar as may be required by a change in generally accepted accounting
principles; and (xiii) except as set forth above, neither ROHN nor any of its
subsidiaries has entered into any other transaction or contract other than in
the ordinary course of business.
3.8. Tax and Other Returns. Except as set forth in Section 3.8 of the ROHN
Schedule (i) all material federal tax returns and tax reports required to be
filed by ROHN or any of its subsidiaries have been filed with
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the appropriate governmental agencies where such returns and reports are
required to be filed; (ii) all material state and local tax returns and tax
reports required to be filed by ROHN or any of its subsidiaries in those states
where either ROHN or any of its subsidiaries have qualified to do business, and
which relate to income, profits, franchise or property taxes, have been filed
with the appropriate governmental agencies in such jurisdiction; (iii) all
federal, state, local and foreign income, profits and franchise taxes
(including interest and penalties) shown due on the tax returns and tax reports
referred to in (i) and (ii) of this paragraph have been fully paid or
adequately reflected as a liability on ROHN's Balance Sheet; (iv) no waivers of
statutes of limitation have been given or requested; and (v) there are no
potential federal tax deficiencies or state and local tax deficiencies with
respect to the returns and reports filed by ROHN and referred to in (i) and
(ii) of this paragraph which may arise from issues which have been raised or
which have not yet been raised but which reasonably might be expected to be
raised by the Internal Revenue Service or appropriate governmental agencies and
reasonably might be expected to have a ROHN Material Adverse Effect.
3.9. Employment Arrangements. Except as disclosed in Section 3.9 of the ROHN
Schedule, neither ROHN nor any of its subsidiaries is a party to any
employment, commission or consultant contract, written or oral, with any
present or former officer, director or employee, or any collective bargaining
agreement, nor does ROHN or any of its subsidiaries have any ROHN Plans (as
defined in Section 3.17). Except as disclosed in Section 3.9 of the ROHN
Schedule, since September 30, 1998 there has been no change in any such plan or
arrangement or in compensation to any director or officer, or any change,
either material in amount or other than in the ordinary course of business, in
compensation to any other employee of ROHN or any of its subsidiaries.
3.10. Property. ROHN and each of its subsidiaries have good and marketable
title in fee simple to all of the real property respectively owned by them, and
good and marketable title to all of the other tangible properties and assets
respectively owned by them, free and clear of all mortgages, liens, pledges,
restrictions, charges or encumbrances of any nature whatsoever, except (i)
liens for taxes not yet delinquent; (ii) liens being contested in good faith by
appropriate proceedings; (iii) such imperfections of title and encumbrances, if
any, as do not materially detract from the value of, or materially interfere
with the present use of, such property; and (iv) for those listed in Section
3.10 of the ROHN Schedule. Neither ROHN nor any of its subsidiaries has
received notice of violation of any zoning regulation, ordinance or other law,
order, regulation or requirement relating to real property owned or leased by
it which violation would reasonably be expected to have a ROHN Material Adverse
Effect.
3.11. Patents, Trademarks, etc. Section 3.11 of the ROHN Schedule correctly
lists all domestic and foreign letters patent, patent applications, patent and
know-how licenses, royalty agreements, trade names, trademark registrations and
applications, common law trademarks, copyrights and copyright registrations and
applications held by ROHN or any of its subsidiaries. Unless otherwise
indicated in the ROHN Schedule, ROHN or such subsidiary owns the entire right,
title and interest in and to the same. All such letters patent, patent
applications, patent and know-how licenses, royalty agreements, trade names,
trademark registrations and applications, common law trademarks, copyrights,
copyright registrations and applications are subject to no pending or, to the
best of the knowledge of ROHN or any of its subsidiaries, threatened litigation
or other adverse claims except as set forth in Section 3.11 of the ROHN
Schedule. Neither ROHN nor any of its subsidiaries has received notice that the
use by it of such patents, trademarks, trade name rights or copyrights infringe
upon or conflict with any patent, trademark, trade name right or copyright of
others.
3.12. Absence of Defaults by Others. No party with whom ROHN or any of its
subsidiaries has an agreement which is of material importance to the business,
properties, financial condition or operations of ROHN or any of its
subsidiaries is in default thereunder, except a default which would not
reasonably be expected to have a ROHN Material Adverse Effect.
3.13. Litigation. Except as disclosed in Section 3.13 of the ROHN Schedule,
neither ROHN nor any of its subsidiaries is a party to or threatened with any
litigation, governmental or other proceeding, investigation, strike or other
labor dispute or other controversy which might affect the validity of this
Agreement or which,
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individually or in the aggregate, might reasonably be expected to have a ROHN
Material Adverse Effect, and there is no outstanding order, writ, injunction or
decree of any Governmental Entity against or affecting ROHN or any of its
subsidiaries or a material portion of their respective businesses, properties,
assets or goodwill.
3.14. Disclosure Documents.
3.14.1 Each document required to be filed by ROHN with the SEC in
connection with the transactions contemplated by this Agreement will, when
filed, comply as to form with the applicable requirements of the Securities
Act and the Securities Exchange Act of 1934 (the "Exchange Act"), and none
of the information supplied or to be supplied by ROHN for inclusion in any
such document filed by ROHN or PIROD will contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.14.2 At the time the ROHN Proxy Statement or any amendment or
supplement thereto is first mailed to the ROHN Shareholders and at the time
such shareholders vote on adoption of this Agreement, the ROHN Proxy
Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
3.14.3 The representations in this Section 3.14 shall not apply to any
information in such documents which is supplied by or on behalf of PIROD.
3.15. Brokers' and Finders' Fees. Except as disclosed in Section 3.15 of the
ROHN Schedule, no agent, broker, person or firm acting on behalf of ROHN or
under its authority has claimed or is or will be entitled to any commission or
broker's or finder's fee from ROHN in connection with the transactions
contemplated by this Agreement. True and complete copies of any agreements
regarding any such commission or fee have been provided to PIROD.
3.16. Insurance. Section 3.16 of the ROHN Schedule correctly lists and
briefly describes all policies of fire, liability, workmen's compensation,
life, business interruption and other types of insurance held by ROHN or any of
its subsidiaries. All such insurance policies are in full force and effect.
3.17. Pension, Retirement and Profit Sharing Plans. Section 3.17 of the ROHN
Schedule lists each pension, profit sharing, stock-bonus, thrift or other
retirement plan, employee stock ownership plan, deferred compensation, stock
purchase, performance share, bonus or other incentive plan, severance plan,
health or welfare plan or other similar plan, agreement, arrangement or
understanding, whether or not reduced to writing and whether or not such plan
is or is intended to be qualified under Section 401(a) of the Code, including,
without limitation, any employee welfare benefit plan or employee pension
benefit plan within the meaning of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") ("ROHN Plan"), maintained or sponsored by ROHN or
any of its subsidiaries. Each ROHN Plan is in full force and effect and has
been administered in all material respects in accordance with its terms and is
and has been, and each plan administrator and fiduciary of a ROHN Plan is and
has been, in compliance in all material respects with all applicable
requirements of ERISA (including the funding, reporting and disclosure and
prohibited transaction provisions thereof) and other applicable laws,
regulations and rulings. Each ROHN Plan intended to qualify under Section
401(a) of the Code is so qualified. Except as set forth in Section 3.17 of the
ROHN Schedule, no ROHN Plan is a "defined benefit plan" (within the meaning of
Section 3(35) of ERISA) or a "multi-employer plan" (within the meaning of
Section 3(37) of ERISA), has terminated or partially terminated and no complete
or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA)
from any such multi-employer plan has occurred. ROHN or one of its subsidiaries
has made, accrued or provided for all contributions required under each ROHN
Plan.
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3.18. Environmental Matters.
Except as disclosed in Section 3.18 of the ROHN Schedule, to ROHN's
knowledge and except such as could not reasonably be expected to have a ROHN
Material Adverse Effect:
3.18.1. ROHN and its current subsidiaries, and all properties currently
owned or leased by ROHN and its subsidiaries (collectively "ROHN Real
Estate"), are in compliance with all applicable environmental and health
and safety laws (collectively "Environmental Laws"). Properties and
subsidiaries formerly owned by ROHN were, as of the date of sale or
divestiture of those properties or subsidiaries, in compliance with all
Environmental Laws.
3.18.2. Neither ROHN nor any of its current subsidiaries has received
any written notice within the past five years that ROHN or its current or
former subsidiaries has any liability, responsibility or obligation,
whether fixed, unliquidated, absolute or contingent, under any
Environmental Laws, or that they are subject to threatened or pending
claims, actions, suits, proceedings or investigations under such laws, for
fines or penalties, or for investigation, expense, removal or response
action to effect compliance with or discharge any obligation or claim under
such laws.
3.18.3. There is no past or continuing release or threat of release,
without an issued permit or permit application, of any hazardous substance
as defined in 42 U.S.C. (S) 9601(14) or petroleum, including crude oil or
any fraction thereof (collectively, "Hazardous Substance") into the
environment, at or from the ROHN Real Estate that necessitates reporting or
response actions under Environmental Law. There was no past release,
without an issued permit or permit application, of any Hazardous Substances
into the environment, at or from a facility formerly owned or operated by
ROHN or a former subsidiary of ROHN where the release occurred prior to the
time such facility or subsidiary was sold or divested by ROHN, that
necessitated reporting or response actions by PIROD or its former
subsidiary where such response action was not completed.
3.18.4. There have been no Hazardous Substances used or generated by
ROHN or any of its current subsidiaries, or former subsidiaries prior to
their sale or divestiture from ROHN, that have been disposed of or come to
rest at any site that has been included on the National Priorities List, or
any comparable state or local list.
3.18.5. There never has been any and there are no underground or above-
ground storage tanks ("USTs" or "ASTs") located on, and there are no
polychlorinated biphenyls ("PCBs"), PCB-containing equipment, or hazardous
waste as defined by the Resource Conservation and Recovery Act ("RCRA") or
comparable state or local laws, disposed on the ROHN Real Estate. Prior to
the sale or divestiture of such other real property previously owned,
leased or used by ROHN or any of its former subsidiaries, there were no
USTs or ASTs located on such property or PCBs or hazardous waste disposed
of on such properties where such USTs, ASTs, PCBs or hazardous waste had
not been removed in accordance with Environmental Laws.
3.18.6. There currently are no Hazardous Substances in the soil or
groundwater at, or migrating from any ROHN Real Estate, the concentration
of which exceeds the most lenient of applicable federal or state standards
consistent with the future industrial use of the ROHN Real Estate.
3.19. Labor Matters. Except as set forth in Section 3.19 of the ROHN
Schedule, ROHN and each of its subsidiaries are, and for the past three years
have remained, in compliance with all currently applicable laws respecting
labor and employment practices, terms and conditions of employment and wages
and hours, and is not engaged in any unfair labor practice, except where the
failure to comply with which or engagement in which, as the case may be,
individually or in the aggregate, has not had, and would not reasonably be
expected to have, a ROHN Material Adverse Effect. There is no unfair labor
practice charge or complaint pending or, to the knowledge of ROHN, threatened
against ROHN before the National Labor Relations Board. Except as otherwise set
forth in Section 3.19 of the ROHN Schedule, there are no strikes, slowdowns,
union organizational or union decertification campaigns or other protected
concerted activity under the National Labor Relations Act or, to the knowledge
of ROHN, threats thereof, by or with respect to any employees of ROHN.
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3.20. Compliance with Laws and Court Orders. Neither ROHN nor any of its
subsidiaries is in violation of, or has for the past three years violated, and
to the knowledge of ROHN none is under investigation with respect to or has
been threatened to be charged with or given notice of any violation of, in each
case, by any governmental agency or authority, any applicable law, rule,
regulation, judgment, injunction, order or decree, except for violations that
have not had, and would not reasonably be expected to have, individually or in
the aggregate, a ROHN Material Adverse Effect.
3.21. Licenses and Permits. Except as set forth on Section 3.21 of the ROHN
Schedule or except as has not had, and would not reasonably be expected to
have, individually or in the aggregate, a ROHN Material Adverse Effect, (i) the
Permits are valid and in full force and effect, (ii) neither ROHN or any
subsidiary is in default under, and no condition exists that with notice or
lapse of time or both would constitute a default under, the Permits and (iii)
none of the Permits will be terminated or impaired or become terminable, in
whole or in part, as a result of the transactions contemplated hereby.
"Permits" for purposes of this Section 3.21 means each material license,
franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of ROHN and its
subsidiaries.
4. Representations and Warranties of PIROD.
PIROD represents and warrants (except as set forth in the April 1998
Confidential Memorandum and in the PIROD Financial Statements (as defined
below) and in that certain schedule dated the date hereof (the "PIROD
Schedule"), all of which have been delivered to ROHN prior to the execution
hereof) that:
4.1. Organization, Good Standing, etc. PIROD and each of its subsidiaries
are corporations duly organized, validly existing and in good standing under
the laws of the respective states of their incorporation, have all requisite
power to own their properties and to carry on their businesses as now being
conducted and are duly qualified to do business and are in good standing in all
other jurisdictions in which qualification as a foreign corporation is
required, except for such failure to be qualified and in good standing, if any,
which when taken together with all other such failures of PIROD and its
subsidiaries would not in the aggregate have a PIROD Material Adverse Effect
(as defined in Section 9.9). Each such corporation, state or country of
incorporation and jurisdiction is set forth in Section 4.1 of the PIROD
Schedule. PIROD has heretofore made available to ROHN a complete and correct
copy of the Certificate of Incorporation and the By-Laws or equivalent
organizational documents, each as amended to the date of this Agreement, of
PIROD and each of its subsidiaries. Such Certificates of Incorporation, By-Laws
and equivalent organizational documents are in full force and effect. Neither
PIROD nor any subsidiary is in violation of any provision of its Certificate of
Incorporation, By-Laws or equivalent organizational documents, except for such
violations that would not, individually or in the aggregate, have a PIROD
Material Adverse Effect.
4.2. Authorized Shares, Absence of Options, Warrants, etc. The authorized
capital stock of PIROD consists of 19,178,000 shares of Class A-1 Common Stock
of PiRod (the "Class A-1 Common"), 235,000 shares of Class A-2 Common Stock of
PiRod (the "Class A-2 Common"), 61,000 shares of Class A-3 Common Stock of
PiRod (the "Class A-3 Common"), 35,000 shares of Class A-4 Common Stock of
PiRod (the "Class A-4 Common"), 25,000 shares of Class A-5 Common Stock of
PiRod (the "Class A-5 Common"), 355,000 shares of Class A-6 Common Stock of
PiRod (the "Class A-6 Common"), 21,000 shares of Class A-7 Common Stock of
PiRod (the "Class A-7 Common"), and 90,000 shares of Class L Common Stock of
PiRod (the "Class L Common"). As of the date of this Agreement, 88,289 shares
of Class A-1 Common, 232,099 shares of Class A-2 Common, 60,146 shares of Class
A-3 Common, 28,420 shares of Class A-4 Common, 20,653 shares of Class A-5
Common, 351,497 shares of Class A-6 Common and 76,776 shares of Class L Common
are issued and outstanding. No PiRod Shares are held in treasury. All of the
outstanding PIROD Shares are, and all PIROD Shares issuable upon due exercise
of outstanding PIROD Options and PIROD Warrants will be, when issued in
accordance with the terms of the PIROD Options and PIROD Warrants, duly
authorized, validly issued, fully paid and nonassessable by PIROD. There are no
voting trusts or
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other agreements or understandings with respect to the voting of any such
Shares known to PIROD (other than the PIROD Shareholders Voting Agreement and
the Stockholders Agreement dated as of August 28, 1996 (the "PIROD Stockholders
Agreement"), a true and complete copy of which has been delivered to ROHN by
PIROD); and there are no outstanding options, warrants, calls, rights of
conversion or exchange or other rights, commitments or agreements of any
character relating to the authorized or issued PIROD Shares known to PIROD,
except for (i) as set forth in PIROD's Certificate of Incorporation, the
Stockholders Agreement and the PIROD Shareholders Voting Agreement and (ii)
exercise of rights of the holders of PIROD Options with respect to a maximum of
12,250 shares of Class A-1 Common and of the holders of PIROD Warrants with
respect to a maximum of 20,028 shares of Class A-7 Common and 12,238 shares of
Class L Common, which PIROD Options and PIROD Warrants (with numbers and
classes of PIROD Shares, exercise prices, holders and duration) are set forth
on Section 4.2 of the PIROD Schedule, PIROD is the owner of all outstanding
capital stock of each of its subsidiaries; no capital stock of any of such
subsidiaries is held in the treasury of any of such subsidiaries; there are no
other shares of capital stock of any class of any of such subsidiaries reserved
for issuance as of the date of this Agreement; there are no voting trusts or
other agreements or understandings with respect to the voting of any of the
equity securities of such subsidiaries; and there are no outstanding options,
warrants, calls, rights of conversion or exchange or other rights, commitments
or agreements of any character relating to equity securities of any of such
subsidiaries. All such capital stock has been duly authorized and validly
issued and is fully paid and non-assessable. Section 4.2 of the PIROD Schedule
lists all stocks, bonds, debentures and other interests in or securities of
such subsidiaries and of other business enterprises owned by PIROD or any of
its subsidiaries.
4.3. Effect of Agreement. The execution, delivery and performance by PIROD
of this Agreement and the consummation by PIROD of the transactions
contemplated hereby are within PIROD's corporate powers and, except for any
required approval by the PIROD Shareholders by majority vote in connection with
the consummation of the Merger, have been duly authorized by all necessary
corporate and stockholder action. This Agreement constitutes a valid and
binding agreement of PIROD, enforceable against PIROD in accordance with its
terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar law affecting creditors' rights generally and
general principles of equity. The execution and delivery of this Agreement by
PIROD and the consummation of the Merger have been duly authorized by the board
of directors of PIROD, do not require the consent, approval or authorization of
or filing with any person or any Governmental Entity other than the approval of
PIROD Shareholders, the filing of the Certificate of Merger contemplated by
Section 1.2, the filings with the SEC, the NASD, the FTC and Justice
contemplated by Section 5.3.1, and the consents, waivers or approvals from
persons party to specified contracts listed in Section 4.3 of the PIROD
Schedule and will not, subject to obtaining the aforesaid consents, waivers or
approvals and making the aforesaid filings, and except such as would not
reasonably be expected to have a PIROD Material Adverse Effect, violate any
law, statute, regulation, injunction, order or decree of any governmental
agency or authority or court, or conflict with or result in a breach of or
constitute a default under any of the terms or provisions of any mortgage,
note, bond or indenture or material obligation to which PIROD or any of its
subsidiaries is a party or by which it or any of its or their properties may be
bound. Subject to securing the consents, waivers and approvals required under
the agreements set forth in Section 4.3 of the PIROD Schedule, the execution
and delivery of this Agreement by PIROD and the consummation of the Merger will
not give to others any interests or rights, including rights of termination or
cancellation, in or with respect to any material property, asset, contract,
agreement, license or other commitment or instrument of PIROD or any of its
subsidiaries, except as would not reasonably be expected to have a PIROD
Material Adverse Effect.
4.4. Contracts and Commitments. Neither PIROD nor any of its subsidiaries is
in breach or violation of or in default (i) under any of the terms or
provisions of any mortgages, leases, notes, bonds, indentures, commitments,
contracts, agreements, licenses or other instruments to which such corporation
is a party or by which it or any of its properties is bound and which is listed
in Section 4.4 of the PIROD Schedule or which singularly is or in the aggregate
are otherwise material to the business, properties, financial condition or
operations of such corporation, (ii) under any law, judgment or decree, or any
order, rule or regulation
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applicable to such corporation or to any of its properties or (iii) in the
payment of any of its obligations for borrowed funds, and there exists no known
condition or known event which, after notice or lapse of time or both, would
constitute a default in connection with any of the foregoing, except any such
breach, violation or default that would not reasonably be expected to have a
PIROD Material Adverse Effect. Section 4.4 of the PIROD Schedule contains a
correct and complete list of the following: (i) each loan, credit agreement,
guarantee, indenture, note, mortgage, security agreement or similar document or
instrument to which PIROD or any of its subsidiaries is a party or by which any
of PIROD's or any of its subsidiaries' assets or properties are bound; (ii)
each lease of personal property to which PIROD or any of its subsidiaries is a
party or by which any of PIROD or its subsidiaries are bound; and (iii) any
other agreement, contract or commitment to which PIROD or any of its
subsidiaries is a party or by which any of PIROD's or any of its subsidiaries'
assets or properties are bound which is a collective bargaining agreement or
which involves a future commitment by PIROD or any of its subsidiaries in
excess of $25,000 and which cannot be terminated without liability on 90 days
or less notice (the "PIROD Material Contracts"). PIROD has delivered to ROHN a
true and complete copy of each of the PIROD Material Contracts. Each of the
PIROD Material Contracts is a valid and binding obligation of PIROD or its
subsidiary, as applicable, enforceable in accordance with its terms, and is in
full force and effect, subject to bankruptcy, reorganization, receivership and
other laws affecting creditors' rights generally.
4.5. Financial Statements. PIROD heretofore has delivered to ROHN a true and
complete copy of (i) PIROD's consolidated balance sheets of PIROD and all its
subsidiaries as of December 28, 1997 and December 29, 1996 and the related
statements of earnings and changes in financial position for the period from
July 24, 1996 to December 29, 1996 and the year ended December 31, 1997 as
audited by PricewaterhouseCoopers and (ii) PIROD's unaudited consolidated
balance sheets and the related statements of earnings and changes in financial
position of PIROD and all its subsidiaries for the three- and nine-month
periods ended September 27, 1998 and 1997 (the "PIROD Financial Statements").
The PIROD Financial Statements fairly present the consolidated financial
condition of PIROD and all its subsidiaries as at the dates thereof and the
consolidated results of operations and changes in financial position for the
periods indicated, all in conformity with generally accepted accounting
principles applied on a consistent basis (except as otherwise stated therein).
For the purposes of this Agreement, all PIROD Financial Statements shall be
deemed to include any notes to such financial statements.
4.6. Absence of Liabilities. Except for liabilities or obligations which
would not reasonably be expected to have a PIROD Material Adverse Effect,
neither PIROD nor any of its subsidiaries has any material liabilities or
obligations, either accrued, absolute, contingent or otherwise, which have not
been (i) reflected in PIROD's Balance Sheet as of September 27, 1998, referred
to in Section 4.5 ("PIROD's Balance Sheet"), (ii) specifically described in
Section 4.6 of the PIROD Schedule, (iii) incurred in the ordinary course of
PIROD's business since September 27, 1998, or (iv) incurred under or in
connection with this Agreement.
4.7. Absence of Certain Changes or Events. Since September 27, 1998, except
as disclosed in Section 4.7 of the PIROD Schedule, (i) neither PIROD nor any of
its subsidiaries has sustained any damage, destruction or loss by reason of
fire, flood, accident or other calamity (whether or not covered by insurance)
that would reasonably be expected to have a PIROD Material Adverse Effect; (ii)
there have been no changes in the condition (financial or otherwise), business,
net worth, assets, properties, obligations or liabilities (fixed or contingent)
of PIROD or any of its subsidiaries that would reasonably be expected to have a
PIROD Material Adverse Effect; (iii) neither PIROD nor any of its subsidiaries
has incurred any obligation for the payment of money extending more than one
year, except for operating leases entered into in the ordinary course of
business; (iv) neither PIROD nor any of its subsidiaries has paid any
obligation or liability (fixed or contingent) except current liabilities
included in PIROD's Balance Sheet and current liabilities incurred since
September 30, 1998 in the ordinary course of business or pursuant to the terms
of this Agreement; (v) PIROD has not declared any other dividend or other
distribution on or with respect to any PIROD Shares; (vi) PIROD has not
purchased, redeemed or otherwise acquired for a consideration, directly or
indirectly, any PIROD Shares or other securities of PIROD; (vii) neither PIROD
nor any of its subsidiaries has disposed of, or agreed
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to dispose of, any material property or asset, other than in the ordinary
course of business and for a consideration at least equal to the fair value of
such property or asset, nor has it leased to others, or agreed so to lease, any
property or asset except in the ordinary course of business and for a
consideration at least equal to the fair rental value of such property or
asset; (viii) neither PIROD nor any of its subsidiaries has made any
expenditures or commitments for the purchase, acquisition, construction or
improvement of a capital asset except in the ordinary course of business and in
an aggregate amount not exceeding $500,000; (ix) neither PIROD nor any of its
subsidiaries has amended its Certificate or Articles of Incorporation or By-
Laws; (x) neither PIROD nor any of its subsidiaries has (A) granted any
severance or termination pay to any director, officer or employee of PIROD or
any subsidiary, (B) entered into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
director, officer or employee of PIROD or any subsidiary, (C) increased
benefits payable under any existing severance or termination pay policies or
employment agreements, (D) increased compensation, bonus or other benefits
payable to directors, officers or employees of PIROD or any subsidiary or (E)
entered into any new, or amended or modified any existing, collective
bargaining agreement; (xi) PIROD has not effected any split, combination or
reclassification of any shares of its outstanding capital stock or any issuance
or the authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock; (xii) neither PIROD
nor any of its subsidiaries has made any change in accounting methods,
principles or practices by PIROD or its subsidiaries materially affecting the
consolidated assets, liabilities or results of operations of PIROD or its
subsidiaries, except insofar as may be required by a change in generally
accepted accounting principles; and (xiii) except as set forth above, neither
PIROD nor any of its subsidiaries has entered into any other transaction or
contract other than in the ordinary course of business.
4.8. Tax and Other Returns. Except as set forth in Section 4.8 of the PIROD
Schedule (i) all material federal tax returns and tax reports required to be
filed by PIROD or any of its subsidiaries have been filed with the appropriate
governmental agencies where such returns and reports are required to be filed;
(ii) all material state and local tax returns and tax reports required to be
filed by PIROD or any of its subsidiaries in those states where either PIROD or
any of its subsidiaries have qualified to do business, and which relate to
income, profits, franchise or property taxes, have been filed with the
appropriate governmental agencies in such jurisdiction; (iii) all federal,
state, local and foreign income, profits and franchise taxes (including
interest and penalties) shown due on the tax returns and tax reports referred
to in (i) and (ii) of this paragraph have been fully paid or adequately
reflected as a liability on PIROD's Balance Sheet; (iv) no waivers of statutes
of limitation have been given or requested; and (v) there are no potential
federal tax deficiencies or state and local tax deficiencies with respect to
the returns and reports filed by PIROD and referred to in (i) and (ii) of this
paragraph which may arise from issues which have been raised or which have not
yet been raised but which reasonably might be expected to be raised by the
Internal Revenue Service or appropriate governmental agencies and reasonably
might be expected to have a PIROD Material Adverse Effect.
4.9. Employment Arrangements. Except as disclosed in Section 4.9 of the
PIROD Schedule, neither PIROD nor any of its subsidiaries is a party to any
employment, commission or consultant contract, written or oral, with any
present or former officer, director or employee, or any collective bargaining
agreement, nor does PIROD or any of its subsidiaries have any PIROD Plans (as
defined in Section 4.17). Except as disclosed in Section 4.9 of the PIROD
Schedule, since September 27, 1998 there has been no change in any such plan or
arrangement or in compensation to any director or officer, or any change,
either material in amount or other than in the ordinary course of business, in
compensation to any other employee of PIROD or any of its subsidiaries.
4.10. Property. PIROD and each of its subsidiaries have good and marketable
title in fee simple to all of the real property respectively owned by them, and
good and marketable title to all of the other tangible properties and assets
respectively owned by them, free and clear of all mortgages, liens, pledges,
restrictions, charges or encumbrances of any nature whatsoever, except (i)
liens for taxes not yet delinquent; (ii) liens being contested in good faith by
appropriate proceedings; (iii) such imperfections of title and encumbrances, if
any, as do not materially detract from the value of, or materially interfere
with the present use of, such property; and
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(iv) for those listed in Section 4.10 of the PIROD Schedule. Neither PIROD nor
any of its subsidiaries has received notice of violation of any zoning
regulation, ordinance or other law, order, regulation or requirement relating
to real property owned or leased by it which violation would reasonably be
expected to have a PIROD Material Adverse Effect.
4.11. Patents, Trademarks, etc. Section 4.11 of the PIROD Schedule correctly
lists all domestic and foreign letters patent, patent applications, patent and
know-how licenses, royalty agreements, trade names, trademark registrations and
applications, common law trademarks, copyrights and copyright registrations and
applications held by PIROD or any of its subsidiaries. Unless otherwise
indicated in the PIROD Schedule, PIROD or such subsidiary owns the entire
right, title and interest in and to the same. All such letters patent, patent
applications, patent and know-how licenses, royalty agreements, trade names,
trademark registrations and applications, common law trademarks, copyrights,
copyright registrations and applications are subject to no pending or, to the
best of the knowledge of PIROD or any of its subsidiaries, threatened
litigation or other adverse claims except as set forth in Section 4.11 of the
PIROD Schedule. Neither PIROD nor any of its subsidiaries has received notice
that the use by it of such patents, trademarks, trade name rights or copyrights
infringe upon or conflict with any patent, trademark, trade name right or
copyright of others.
4.12. Absence of Defaults by Others. No party with whom PIROD or any of its
subsidiaries has an agreement which is of material importance to the business,
properties, financial condition or operations of PIROD or any of its
subsidiaries is in default thereunder, except a default which would not
reasonably be expected to have a PIROD Material Adverse Effect.
4.13. Litigation. Except as disclosed in Section 4.13 of the PIROD Schedule,
neither PIROD nor any of its subsidiaries is a party to or threatened with any
litigation, governmental or other proceeding, investigation, strike or other
labor dispute or other controversy which might affect the validity of this
Agreement or which, individually or in the aggregate, might reasonably be
expected to have a PIROD Material Adverse Effect, and there is no outstanding
order, writ, injunction or decree of any Governmental Entity against or
affecting PIROD or any of its subsidiaries or a material portion of their
respective businesses, properties, assets or goodwill.
4.14. Disclosure Documents.
4.14.1 Each document required to be filed by PIROD with the SEC in
connection with the transactions contemplated by this Agreement will, when
filed, comply as to form with the applicable requirements of the Securities
Act and the Exchange Act, and none of the information supplied or to be
supplied by PIROD for inclusion in any such document filed by PIROD or
ROHN, including the ROHN Proxy Statement, will contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.14.2 The representations in this Section 4.14 shall not apply to any
information in such documents which is supplied by or on behalf of ROHN.
4.15. Brokers' and Finders' Fees. Except as disclosed in Section 4.15 of the
PIROD Schedule, no agent, broker, person or firm acting on behalf of PIROD or
under its authority has claimed or is or will be entitled to any commission or
broker's or finder's fee from PIROD in connection with the transactions
contemplated by this Agreement. True and complete copies of any agreements
regarding any such commission or fee have been provided to ROHN.
4.16. Insurance. Section 4.16 of the PIROD Schedule correctly lists and
briefly describes all policies of fire, liability, workmen's compensation,
life, business interruption and other types of insurance held by PIROD or any
of its subsidiaries. All such insurance policies are in full force and effect.
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4.17. Pension, Retirement and Profit Sharing Plans. Section 4.17 of the
PIROD Schedule lists each pension, profit sharing, stock-bonus, thrift or other
retirement plan, employee stock ownership plan, deferred compensation, stock
purchase, performance share, bonus or other incentive plan, severance plan,
health or welfare plan or other similar plan, agreement, arrangement or
understanding, whether or not reduced to writing and whether or not such plan
is or is intended to be qualified under Section 401(a) of the Code, including,
without limitation, any employee welfare benefit plan or employee pension
benefit plan within the meaning of ERISA ("PIROD Plan"), maintained or
sponsored by PIROD or any of its subsidiaries. Each PIROD Plan is in full force
and effect and has been administered in all material respects in accordance
with its terms and is and has been, and each plan administrator and fiduciary
of a PIROD Plan is and has been, in compliance in all material respects with
all applicable requirements of ERISA (including the funding, reporting and
disclosure and prohibited transaction provisions thereof) and other applicable
laws, regulations and rulings. Each PIROD Plan intended to qualify under
Section 401(a) of the Code is so qualified. Except as set forth in Section 4.17
of the PIROD Schedule, no PIROD Plan is a "defined benefit plan" (within the
meaning of Section 3(35) of ERISA) or a "multi-employer plan" (within the
meaning of Section 3(37) of ERISA), has terminated or partially terminated and
no complete or partial withdrawal (within the meaning of Sections 4203 and 4205
of ERISA) from any such multi-employer plan has occurred. PIROD or one of its
subsidiaries has made, accrued or provided for all contributions required under
each PIROD Plan.
4.18. Environmental Matters.
Except as disclosed in Section 4.18 of the PIROD Schedule, to PIROD's
knowledge and except such as could not reasonably be expected to have a PIROD
Material Adverse Effect:
4.18.1. PIROD and its current subsidiaries, and all properties currently
owned or leased by PIROD and its subsidiaries (collectively "PIROD Real
Estate"), are in compliance with all Environmental Laws. Properties and
subsidiaries formerly owned by PIROD were, as of the date of sale or
divestiture of those properties or subsidiaries, in compliance with all
Environmental Laws.
4.18.2. Neither PIROD nor any of its current subsidiaries has received
any written notice within the past five years that PIROD or its current or
former subsidiaries has any liability, responsibility or obligation,
whether fixed, unliquidated, absolute or contingent, under any
Environmental Laws, or that they are subject to threatened or pending
claims, actions, suits, proceedings or investigations under such laws, for
fines or penalties, or for investigation, expense, removal or response
action to effect compliance with or discharge any obligation or claim under
such laws.
4.18.3. There is no past or continuing release or threat of release,
without an issued permit or permit application, of any Hazardous Substance
into the environment, at or from the PIROD Real Estate that necessitates
reporting or response actions under Environmental Law. There was no past
release, without an issued permit or permit application, of any Hazardous
Substances into the environment, at or from a facility formerly owned or
operated by PIROD or a former subsidiary of PIROD where the release
occurred prior to the time such facility or subsidiary was sold or divested
by PIROD, that necessitated reporting or response actions by PIROD or its
former subsidiary where such response action was not completed.
4.18.4. There have been no Hazardous Substances used or generated by
PIROD or any of its current subsidiaries, or former subsidiaries prior to
their sale or divestiture from PIROD, that have been disposed of or come to
rest at any site that has been included on the National Priorities List, or
any comparable state or local list.
4.18.5. There never has been any and there are no underground or above-
ground USTs or ASTs located on, and there are no PCBs, PCB-containing
equipment, or hazardous waste as defined by RCRA or comparable state or
local laws, disposed on the PIROD Real Estate. Prior to the sale or
divestiture of such other real property previously owned, leased or used by
PIROD or any of its former subsidiaries, there were no USTs or ASTs located
on such property or PCBs or hazardous waste disposed of on such properties
where such USTs, ASTs, PCBs or hazardous waste had not been removed in
accordance with Environmental Laws.
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4.18.6. There currently are no Hazardous Substances in the soil or
groundwater at, or migrating from any PIROD Real Estate, the concentration
of which exceeds the most lenient of applicable federal or state standards
consistent with the future industrial use of the PIROD Real Estate.
4.19. Financing. PIROD has delivered to ROHN a true and correct copy of a
"highly confident" letter from J. P. Morgan Securities Inc. and Morgan Guaranty
Trust Company of New York (Exhibit A hereto) (the "Financing Letter"), which
letter has not been modified or withdrawn.
4.20. Ownership of ROHN Shares. None of PIROD or any direct or indirect
subsidiary of PIROD beneficially owns any ROHN Shares (other than pursuant to
the Trust Voting Agreement).
4.21. Labor Matters. Except as set forth in Section 4.21 of the PIROD
Schedule, PIROD and each of its subsidiaries are, and for the past three years
have remained, in compliance with all currently applicable laws respecting
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practice, except where the failure to
comply with which or engagement in which, as the case may be, individually or
in the aggregate, has not had, and would not reasonably be expected to have, a
PIROD Material Adverse Effect. There is no unfair labor practice charge or
complaint pending or, to the knowledge of PIROD, threatened against PIROD
before the National Labor Relations Board. Except as otherwise set forth in
Section 4.21 of the PIROD Schedule, there are no strikes, slowdowns, union
organizational or union decertification campaigns or other protected concerted
activity under the National Labor Relations Act or, to the knowledge of PIROD,
threats thereof, by or with respect to any employees of PIROD.
4.22. Compliance with Laws and Court Orders. Neither PIROD nor any of its
subsidiaries is in violation of, or for the past three years has PIROD or any
of its subsidiaries violated, and to the knowledge of PIROD none is under
investigation with respect to or has been threatened to be charged with or
given notice of any violation of, in each case, by any governmental agency or
authority, any applicable law, rule, regulation, judgment, injunction, order or
decree, except for violations that have not had, and would not reasonably be
expected to have, individually or in the aggregate, a PIROD Material Adverse
Effect.
4.23. Licenses and Permits. Except as set forth on Section 4.23 of the PIROD
Schedule or except as has not had, and would not reasonably be expected to
have, individually or in the aggregate, a PIROD Material Adverse Effect, (i)
the Permits are valid and in full force and effect, (ii) neither PIROD or any
subsidiary is in default under, and no condition exists that with notice or
lapse of time or both would constitute a default under, the Permits and (iii)
none of the Permits will be terminated or impaired or become terminable, in
whole or in part, as a result of the transactions contemplated hereby.
"Permits" for purposes of this Section 4.23 means each material license,
franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of PIROD and its
subsidiaries.
5. Conduct and Transactions Prior to Closing Date.
5.1. Conduct of Business by ROHN and PIROD Pending the Closing Date. From
the date hereof until the Closing Date, except as otherwise contemplated by
this Agreement or as may be consented to in writing by the other, each of ROHN
and PIROD on its behalf and on behalf of their subsidiaries:
5.1.1. shall conduct their businesses only in the ordinary course, and
shall use their commercially reasonable best efforts to preserve
substantially intact their business organizations, shall keep available the
services of their present officers and employees and to preserve their
present relationships with persons having significant business relations
therewith.
5.1.2. shall make no change in their Certificate or Articles of
Incorporation or By-Laws, except to the extent that any such change is
necessary in order for the parties to consummate the transactions
contemplated by this Agreement or to cause any conditions to the Closing
Date to be met.
5.1.3. shall make no purchase, redemption or other acquisition of any
outstanding ROHN or PIROD Shares or other securities of ROHN or PIROD or
any of their subsidiaries; and no option, warrant or other right to acquire
and no securities convertible into any ROHN or PIROD Shares or any other
equity securities of ROHN or PIROD or any of their subsidiaries shall be
granted or issued.
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5.1.4. No dividend, distribution or payment shall be declared, made or
paid in respect of any ROHN or PIROD Shares or any other equity securities
of ROHN or PIROD.
5.1.5. Except as disclosed in the ROHN or PIROD Schedule or as may be
required by the provisions of contracts, agreements or ROHN or PIROD Plans
listed in the ROHN or PIROD Schedule, (i) no increase shall be made in the
compensation payable to directors, officers or employees except in the
ordinary course of business consistent with past practices to employees
other than executive officers; (ii) no profit sharing, incentive, bonus,
pension, retirement or similar payments shall be made, except in the
ordinary course of business consistent with past practices; (iii) no
existing contract or agreement shall be amended, and no new contract or
agreement entered into, with respect to such compensation or payments; (iv)
no new or amended collective bargaining agreements shall be entered into;
and (v) no new or amended employment or severance agreements shall be
entered into.
5.1.6. No party or subsidiary shall (i) make any borrowings, except in
the ordinary course of business under bank lines of credit for periods not
to exceed ninety days (and successive refinancings of such borrowings for
like periods), or guarantee obligations of others; (ii) make or commit to
make any capital expenditures not already committed to by such party or
subsidiary or acquisitions of the stock or assets of any other entities, in
each case, exceeding $250,000 individually, or $500,000 in the aggregate;
(iii) enter into any merger or consolidation with any other person; or (iv)
except as disclosed in the ROHN or PIROD Schedule, make any sale or
conveyance of any of its assets, except in the ordinary course of business.
5.1.7. Each party and its subsidiaries shall use their commercially
reasonable best efforts to maintain in full force and effect until the
Closing Date the insurance policies listed in their respective ROHN or
PIROD Schedule and to obtain substitute insurance for any policies not so
maintained, shall promptly advise the other of any fires, accidents or
other casualties occurring on or before the Closing Date which singularly
or in the aggregate materially affect the value of their business and
properties and shall, to the extent necessary, obtain endorsements to such
policies to provide that both parties shall have the benefit of protection
under such policies for casualties occurring on or before the Closing Date
as their interests may appear.
5.1.8. Each party shall, and shall direct its officers, directors,
employees, representatives and agents to, immediately cease any discussions
or negotiations with any parties that may be ongoing with respect to a
Takeover Proposal (as hereinafter defined). ROHN and PIROD shall not, and
shall not authorize or permit any of their officers, directors or employees
or any investment banker, financial advisor, attorney, accountant or other
representative retained by them to, directly or indirectly, (i) solicit,
initiate or encourage any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover
Proposal or (ii) participate in any discussions or negotiations regarding
any Takeover Proposal; provided, however, that if, at any time prior to the
Effective Time, the board of directors of ROHN or PIROD determines in good
faith, after consultation with its financial and legal advisers, that a
Takeover Proposal that has not been solicited, initiated or encouraged
after the date hereof in violation of clause (i) above may reasonably be
expected to result in a Superior Proposal (as defined in Section
8.1.3(iii)), ROHN or PIROD may (x) furnish information with respect to
itself and its subsidiaries to the third party that has made such Takeover
Proposal (and to any investment banker, financial advisor, attorney,
accountant or other representative retained by such party) pursuant to a
customary and reasonable confidentiality agreement and (y) participate in
negotiations regarding such Takeover Proposal. For purposes of this
Agreement, "Takeover Proposal" means any bona fide written proposal made by
a third party to acquire, directly or indirectly, more than 50% of the
voting power of the equity interests or of the assets of ROHN or PIROD;
provided, however, that a change in the terms of a proposal submitted prior
to the date hereof shall be deemed a new Takeover Proposal. A party shall
within 24 hours advise the other orally and in writing of any request for
information or of any Takeover Proposal or any inquiry regarding the making
of a Takeover Proposal and shall keep the other party informed of the
status of any change to the terms of a Takeover Proposal. Nothing contained
in this Section 5.1.8 shall prohibit ROHN or PIROD from at any time taking
and disclosing to its shareholders a position or change thereof with
respect to the
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Merger or, pursuant to Rule 14e-2(a) under the Exchange Act, with respect
to a third party tender offer, or from making any disclosure to its
shareholders if, in the good faith judgment of its board of directors,
after consultation with outside counsel, failure so to disclose would
create a material risk of liability for breach of its fiduciary duties to
its shareholders under applicable law.
5.2. Agreements of ROHN and PIROD.
5.2.1. Each of ROHN and PIROD shall give to the other and to its
counsel, accountants and other representatives full access, during normal
business hours throughout the period prior to the Closing Date, to all of
the properties, books, contracts, commitments and records of its and its
subsidiaries and shall furnish all such information concerning their
business and properties as the other reasonably may request; provided,
however, that neither ROHN nor PIROD shall be required to disclose
information that would otherwise jeopardize protections offered under the
attorney-client privilege or the work product doctrine or that could
reasonably be expected to violate any confidentiality obligations of either
ROHN or PIROD currently in effect, and, provided, further, that any
investigation of the other or any of its subsidiaries either before or
after the date hereof, including any review of the ROHN or PIROD Schedule,
shall not affect any representations, warranties, covenants and agreements
hereunder. Section 9.11 shall apply to such information.
5.2.2. Each of ROHN and PIROD shall supply the other with accurate
information as shall be required for inclusion in any documents required to
be filed with the SEC by the other party.
5.2.3. Each of ROHN and PIROD shall use its commercially reasonable best
efforts to consummate the financing of the transactions contemplated hereby
on the terms set forth in Exhibit A hereto.
5.2.4. ROHN shall use its commercially reasonable best efforts to have
the registration statement contemplated by Section 1.10.4 hereof declared
effective by the SEC as soon as reasonably practicable.
5.3. Reasonable Efforts; Notification.
5.3.1. Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its commercially reasonable best efforts to take,
or cause to be taken, all appropriate action, and to do or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
by this Agreement as soon as practicable, including but not limited to (i)
cooperation in the preparation and filing of the Proxy Statement and any
other documents to be filed with the SEC, any required filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") or
with the NASD or other foreign filings and any amendments or supplements to
any thereof and (ii) using its commercially reasonable best efforts to
promptly make all required regulatory filings and applications including,
without limitation, responding promptly to requests for further information
and to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities as are necessary for the
consummation of the transactions contemplated by this Agreement and to
fulfill the conditions to the Merger. In case at any time after the
Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall use their commercially reasonable best
efforts to take all such necessary action.
5.3.2. ROHN and PIROD each shall keep the other apprised of the status
of matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notices or other
communications received by them or any of their subsidiaries, from any
Governmental Entity with respect to the Merger or any of the other
transactions contemplated by this Agreement. The parties hereto will
consult and cooperate with one another, and consider in good faith the
views of one another in connection with, and shall provide each other the
opportunity to review and comment upon, any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with
proceedings under or relating to the HSR Act or any other antitrust law.
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5.3.3. Without limiting the generality of the undertakings pursuant to
this Section 5.3: (i) ROHN and PIROD agree that, if necessary to prevent
any Governmental Entity from taking steps to obtain, or from issuing, any
order, injunction, decree, judgment or ruling or the taking of any other
action that would (x) restrain, enjoin or otherwise prohibit the Merger or
any of the other transactions contemplated by this Agreement or (y) cause
any condition to the Merger not to be satisfied, such party shall (A) offer
to accept an order to divest (and to enter into a consent decree or other
agreement giving effect thereto) such of ROHN's or PIROD's assets and
business, and agree to hold separate such assets and business pending such
divestiture, and (B) enter into any supply, license, tolling, joint venture
or other agreement or take any other action, as may be necessary to
forestall such order, decree, ruling or action; provided, however, that
notwithstanding the foregoing provisions of this clause (i), ROHN and PIROD
shall not be required to take any such action that would have a ROHN or
PIROD Material Adverse Effect, or to waive any material rights, and (ii)
without limitation of clause (i) of this Section 5.3.3, ROHN and PIROD each
agree to contest and resist any action seeking to have imposed any order,
decree, judgment, injunction, ruling or other order (whether temporary,
preliminary or permanent) (an "Order") that (x) would delay, restrain,
enjoin or otherwise prohibit consummation of the Merger or any of the other
transactions contemplated by this Agreement or (y) cause any condition to
the Merger not to be satisfied and, in the event that any such temporary or
preliminary Order is entered in any proceeding, to take the steps
contemplated by clause (i) of this Section 5.3.3 and to use its
commercially reasonable best efforts to take promptly any and all other
steps (including, the appeal thereof and the posting of a bond) necessary
to vacate, modify or suspend such Order so as to permit such consummation
as promptly as practicable after the date hereof.
5.4. At any time from the date hereof until the Closing Date, in the event
that PIROD notifies ROHN that it has been informed by any of the PIROD
Shareholders or any holder of PIROD Warrants that such holder has a Regulatory
Problem (as defined below), ROHN shall take all such actions as are reasonably
requested by PIROD in order to (a) establish a class of nonvoting common stock
of ROHN, which nonvoting common stock shall be identical in all respects to the
ROHN Shares, except that such common stock shall be nonvoting and shall be
convertible into ROHN Shares on such terms as are requested by PIROD in light
of regulatory considerations then prevailing, and (b) amend this Agreement, the
Certificate of Incorporation and other related agreements to effectuate and
reflect the foregoing. For purposes of this Agreement, a "Regulatory Problem"
means any set of facts or circumstances wherein it has been asserted by any
governmental regulatory agency (or such holder of PIROD Shares or PIROD
Warrants believes that there is a substantial risk of such assertion) that such
holder is not entitled to hold, or exercise any significant right with respect
to, the ROHN Shares.
6. Conditions Precedent to the Closing.
6.1. Conditions to the Obligations of Both Parties. The respective
obligations of ROHN and PIROD to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of each of the following
conditions:
(a) Stockholder Approvals. The stockholders of ROHN and PIROD shall have
duly approved the transactions contemplated by this Agreement.
(b) Certain Actions. There shall not have been any action threatened or
taken, or any statute, rule, regulation, judgment, order or injunction
promulgated, enacted, entered or enforced, by any Governmental Entity, that
could reasonably be expected to (i) make the consummation of the Merger
illegal or otherwise prohibited, or (ii) prohibit or impose any material
limitation on the Surviving Corporation's ownership or operation of any
material portion of the assets or businesses of ROHN or PIROD.
(c) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated.
(d) Bankruptcy Court Approval. The sale pursuant to this Agreement of
the ROHN Shares beneficially owned by the Trust shall have been approved by
the Bankruptcy Court as provided in the Plan of Reorganization.
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(e) Financing. The financing contemplated by Exhibit A hereto shall have
been consummated, not later than the Closing Date.
(f) SEC Effectiveness. The SEC shall have declared the registration
statement contemplated by Section 1.10.4 hereof effective. On the Closing
Date and at the Effective Time, no stop order or similar restraining order
shall have been entered by the SEC.
6.2. Conditions to the Obligations of ROHN. The obligation of ROHN to
effect the Merger is further subject to the following conditions:
(a) Accuracy of Representations and Warranties. The representations and
warranties of PIROD contained herein (without giving effect to the
materiality, PIROD Material Adverse Effect or knowledge qualifications
contained therein) shall be true and correct when made and shall be true
and correct as of the Closing Date as though made on and as of the Closing
Date (except to the extent that any such representation and warranty had by
its terms been made as of a specific date, in which case such
representation and warranty shall have been true and correct as of such
specific date), except, in all instances, where the failure to be so true
and correct shall not result, individually or in the aggregate, in a PIROD
Material Adverse Effect; and ROHN shall have received a certificate signed
on behalf of PIROD by the chief executive officer and the chief financial
officer of PIROD to such effect.
(b) Performance of Obligations of PIROD. PIROD shall have performed the
obligations required to be performed by it under this Agreement at or prior
to the Closing Date, except for such failures to perform as have not had or
would not, individually or in the aggregate, reasonably be expected to have
a PIROD Material Adverse Effect or materially adversely affect the ability
of PIROD to consummate the transactions contemplated hereby.
(c) PIROD Material Adverse Effect. There shall not have been a PIROD
Material Adverse Effect.
(d) Fairness Opinions. Neither of the fairness opinions of Donaldson,
Lufkin & Jenrette Securities Corporation to ROHN and the Trust dated the
date of this Agreement shall have been withdrawn.
(e) ROHN Tax Opinion. ROHN shall have received from its counsel an
opinion to the effect that the Merger will be a reorganization within the
meaning of Section 368(a) of the Code and that no gain or loss will be
recognized to either ROHN or PIROD for federal income tax purposes as a
result of the Merger.
(f) Solvency Opinion. ROHN shall have received a solvency opinion within
ten business days after the date of this Agreement, which opinion will be
confirmed at the Closing.
(g) Termination of the Management and Advisory Agreement. The Management
and Advisory Agreement dated August 28, 1996 by and between PIROD, Inc., a
Delaware corporation and wholly-owned subsidiary of PIROD, and Bain Capital
Partners V, L.P., a Delaware limited partnership, shall have been
terminated by mutual written consent of the parties.
(h) Acknowledgment of Holders of PIROD Class L Warrants. Each holder of
a PIROD Class L Warrant shall have acknowledged in writing that the number
of ROHN Shares, together with the applicable exercise price per share
thereof, issuable pursuant to each ROHN Exchange Warrant that such holder
shall be entitled to receive pursuant to the conversion of such PIROD Class
L Warrant into the ROHN Exchange Warrant upon consummation of the Merger is
as set forth on Exhibit 1.8.4.
(i) Additional Fairness Opinions. If the Available Cash at the Effective
Time is less than $105.0 million, ROHN and the Trust shall each have
received a fairness opinion as of the date of the Effective Time from
Donaldson, Lufkin and Jenrette Securities Corporation to the effect that
the consideration to be received and/or retained by the holders of ROHN
Shares (and, in the case of the Trust, the Trust) pursuant to this
Agreement is fair to such holders (and, if applicable, the Trust) from a
financial point of view.
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6.3. Conditions to the Obligations of PIROD. The obligation of PIROD to
effect the Merger is further subject to the following conditions.
(a) Accuracy of Representations and Warranties. The representations and
warranties of ROHN contained herein (without giving effect to the
materiality, ROHN Material Adverse Effect or knowledge qualifications
contained therein) shall be true and correct when made and shall be true
and correct as of the Closing Date as though made on and as of the Closing
Date (except to the extent that any such representation and warranty had by
its terms been made as of a specific date, in which case such
representation and warranty shall have been true and correct as of such
specific date), except, in all instances, where the failure to be so true
and correct shall not result, individually or in the aggregate, in a ROHN
Material Adverse Effect; and PIROD shall have received a certificate signed
on behalf of ROHN by the chief executive officer and the chief financial
officer of ROHN to such effect.
(b) Performance of Obligations of ROHN. ROHN shall have performed its
obligations required to be performed by it under this Agreement at or prior
to the Closing Date, except for such failures to perform as have not had or
would not, individually or in the aggregate, reasonably be expected to have
a ROHN Material Adverse Effect on or materially adversely affect the
ability of ROHN to consummate the transactions contemplated hereby.
(c) ROHN Material Adverse Effect. There shall not have been a ROHN
Material Adverse Effect.
(d) PIROD Tax Opinion. PIROD shall have received from its counsel an
opinion to the effect that the Merger will be a reorganization within the
meaning of Section 368(a) of the Code and that no gain or loss will be
recognized to a PIROD Shareholder who exchanges his PIROD Shares for ROHN
Shares in the Merger, except to the extent of any cash received with
respect to fractional shares.
7. Amendment of Agreement; Waivers.
7.1. Amendment. At any time, whether before or after submission to or
approval by the shareholders of ROHN and PIROD as provided herein, this
Agreement may be amended in writing to any extent determined by the
appropriate officers of the parties hereto not to be materially adverse to the
interests of their respective stockholders.
7.2. Waiver. Any party hereto may waive in writing compliance by the others
with any of the covenants and conditions contained in this Agreement (except
such as may be imposed by law) to the extent such party believes such action
may not be materially adverse to the interests of its stockholders; such
waiver shall be evidenced by a certificate to such effect signed, in the case
of ROHN, by any one of its President and Vice Presidents, and in the case of
PIROD, by any one of its President and Vice Presidents.
8. Termination.
8.1. Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval by shareholders of ROHN and PIROD:
8.1.1. by mutual written consent of the boards of directors of ROHN and
PIROD;
8.1.2. by ROHN or PIROD if any court of competent jurisdiction, or any
governmental body, regulatory or administrative agency or commission having
appropriate jurisdiction shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and non-appealable.
8.1.3. by ROHN or PIROD:
(a) if prior to the Closing Date, the board of directors of ROHN or
PIROD determines that a Takeover Proposal constitutes a Superior
Proposal. For purposes of this Agreement, a "Superior Proposal" means
any Takeover Proposal having terms which the board of directors of ROHN
or
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<PAGE>
PIROD determines in its good faith judgment (based, with respect to the
consideration payable, on the opinion of a financial advisor of
nationally recognized reputation) (x) to be more favorable to its
shareholders from a financial point of view (taking into account, among
other things, the type and amount of consideration to be received and
risks of non-consummation) than the Merger and (y) to be reasonably
capable of being completed (and for which financing has been committed
on customary terms); provided, however, that no termination pursuant to
this Section 8.1.3(iii) shall be effective unless concurrently with
such termination a termination fee of $5.5 million is paid in cash by
ROHN to PIROD, in the case of a ROHN termination, or a termination fee
of $2.0 million is paid in cash by PIROD to ROHN, in the case of a
PIROD termination.
(b) if the Merger shall not have been consummated on or before the
later of (i) May 15, 1999 or (ii) 45 days after the SEC has completed
its review of the Proxy Statement (but in no event later than July 15,
1999), provided that the right to terminate this Agreement pursuant to
this Section 8.1.3(b) shall not be available to any party whose failure
to perform any of its obligations under this Agreement results in the
failure to be consummated by such time.
8.2. Notice and Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
pursuant to which such termination is made, and this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
or its directors, officers or stockholders, except for the provisions of
Sections 3.15, 4.15, Section 8.1.3(b), this Section 8.2 and Section 9. Nothing
contained in this Section 8.2 shall relieve any party from liability for any
breach of this Agreement. This Section 8 shall survive any termination of this
Agreement.
9. Miscellaneous.
9.1. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 8.1, an amendment of this
Agreement pursuant to Section 7.1 or an extension or waiver pursuant to Section
7.2 shall, in order to be effective, require in the case of ROHN or PIROD,
action by its board of directors or the duly authorized designee of its board
of directors.
9.2. Survival of Representations and Warranties. The respective
representations and warranties of ROHN and PIROD shall not be deemed waived or
otherwise affected by any investigation made by any party. Each representation
and warranty in this Agreement shall expire with, and be terminated and
extinguished by, the Merger. This Section 9.2 shall have no effect upon any
other obligation of the parties, whether to be performed before or after the
Merger.
9.3. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or on the second
succeeding business day after being mailed, postage prepaid, by registered or
certified mail to the appropriate party at its address below (or at such other
address for such party as shall be specified by notice in fact delivered):
(a) If to PIROD, to it at:
PiRod Holdings, Inc.
1545 Pidco Drive
P.O. Box 128
Plymouth, Indiana 46563
Attention: Myron Noble
Chief Executive Officer
With copies to:
Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
Attention: Paul Spinale
Principal
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<PAGE>
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: James L. Learner
(b) If to ROHN, to it at:
6718 West Plank Road
Peoria, Illinois 61604
Attention: General Counsel
With copies to:
Bell, Boyd & Lloyd
Three First National Plaza
70 West Madison Street
Chicago, Illinois 60602
Attention: Victor E. Grimm
John H. Laeri, Jr.
UNR Asbestos-Disease Claim Trust
100 North Lincoln Way
North Aurora, IL 60542
Hughes, Hubbard & Reed LLP
One Battery Park Plaza
New York, NY 10004
Attention: Ed Kaufmann
9.4. Expenses. All legal, accounting and other costs and expenses incurred
in connection herewith and the transactions contemplated hereby shall be paid
by the Surviving Corporation if the Merger is consummated. If the Merger is not
consummated, each party shall pay the costs and expenses incurred by it other
than the costs incurred by PIROD to secure the Financing Letter attached hereto
as Exhibit A, which shall be split as follows: ROHN--76% and PIROD--24%;
provided, however, ROHN's obligation hereunder to pay fees incurred by PIROD in
connection with the Financing Letter shall be limited to $100,000, and,
provided further, ROHN shall have no obligation to pay any portion of such fees
in the event that ROHN is obligated to pay a termination fee to PIROD under
Section 8.1.3(a) hereof.
9.5. Headings. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
9.6. Governing Law; Jurisdiction. The Agreement shall be construed, and the
rights of the parties hereto determined, in accordance with the internal
substantive laws of the State of Delaware without giving effect to principles
of conflicts, or choice of law of the State of Delaware or of any other
jurisdiction. Each of the parties hereto (i) submits itself to the personal
jurisdiction of any federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, and consents to service of process
by notice as provided in this Agreement, (ii) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (iii) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated hereby in
any court other than a federal or state court sitting in the State of Delaware.
The parties agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of this
Agreement in any federal court located in the State of Delaware or in any
Delaware state court, this being in addition to any other remedy to which they
are entitled at law or in equity.
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<PAGE>
9.7. Assignment. This Agreement shall not be assignable by any party hereto
except with the written consent of the other parties. Except for Section 9.8
hereof, nothing in this Agreement, express or implied, is intended to confer
upon any person, other than the parties hereto and their successors and
permitted assigns, any rights or remedies under or by reason of this Agreement.
9.8. Officers' and Directors' Insurance; Indemnification.
9.8.1. From and after the date hereof and for six years from the
Effective Time, the Surviving Corporation shall use its commercially
reasonable best efforts to cause to be maintained in effect ROHN's current
directors' and officers' insurance and indemnification policy or an
equivalent policy or policies.
9.8.2. From and after the Closing Date and for six years after the
Effective Time, the Surviving Corporation shall not take any action that
would change or amend the provisions of any existing indemnification
agreements or the Certificate of Incorporation or By-Laws of the Surviving
Corporation set forth in Exhibits A and B hereto relating to
indemnification, advancement of expenses or limitation of liability in any
manner that would adversely affect the rights thereunder of individuals who
at or prior to the Effective Time were directors, officers, employees,
agents or other representatives of ROHN, PIROD or any of their
subsidiaries.
9.8.3. If the Surviving Corporation or any of its successors or assigns
(i) reorganizes or consolidates with or merges into any other person and is
not the resulting, continuing or surviving corporation or entity of such
consolidation or merger, or (ii) liquidates, dissolves or transfers all or
substantially all of its properties and assets to any person, then, and in
each such case, proper provision will be made so that the successors and
assigns of the Surviving Corporation assume the obligations set forth in
this Section 9.8.
9.9. ROHN and PIROD Material Adverse Effect. As used herein, "ROHN Material
Adverse Effect" means any change in or effect on the business of ROHN or its
subsidiaries that is materially adverse to the business, assets, results of
operations or financial condition of ROHN and its subsidiaries, taken as a
whole, or materially impairs the ability of ROHN to consummate the Merger or
the other transactions contemplated by this Agreement; provided, however, that
"ROHN Material Adverse Effect" shall be deemed to exclude the impact of (i)
changes in generally accepted accounting principles; (ii) the public
announcement of the Merger and compliance with the provisions of this
Agreement; (iii) any changes resulting from any restructuring or other similar
charges or write-offs taken by ROHN with the consent of PIROD; (iv) the
termination or failure to be consummated or completed of any acquisition, joint
venture, development project or other transaction, which was not consummated or
completed prior to the execution and delivery of this Agreement; and (v) any
change in general economic conditions, in interest rates or in conditions
affecting the telecommunications industry generally. As used herein, "PIROD
Material Adverse Effect" means any change in or effect on the business of PIROD
or its subsidiaries that is materially adverse to the business, assets, results
of operations or financial condition of PIROD and its subsidiaries, taken as a
whole, or materially impairs the ability of PIROD to consummate the Merger or
the other transactions contemplated by this Agreement; provided, however, that
"PIROD Material Adverse Effect" shall be deemed to exclude the impact of (i)
changes in generally accepted accounting principles; (ii) the public
announcement of the Merger and compliance with the provisions of this
Agreement; (iii) any changes resulting from any restructuring or other similar
charges or write-offs taken by PIROD with the consent of ROHN; (iv) the
termination or failure to be consummated or completed of any acquisition, joint
venture, development project or other transaction, which was not consummated or
completed prior to the execution and delivery of this Agreement; and (v) any
change in general economic conditions, in interest rates or in conditions
affecting the telecommunications industry generally.
9.10. Entire Agreement. This Agreement and the Exhibits and ROHN and PIROD
Schedules attached hereto contain the entire Agreement of the parties with
respect to the Merger and other transactions contemplated herein, and supersede
all prior understandings and agreements of the parties with respect to the
subject matter hereof. Any reference to this Agreement shall be deemed to
include the Exhibits and ROHN and PIROD Schedules attached hereto.
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<PAGE>
9.11. Confidentiality.
9.11.1. Except as may be reasonably necessary to carry out this
Agreement and the transactions contemplated by this Agreement, each of ROHN
and PIROD shall, and each shall require its subsidiaries, officers,
directors, employees and authorized representatives to, hold in confidence
prior to the Effective Time and for two years from any termination of this
Agreement all data and information obtained by it from the other (unless
required to disclose such information by judicial or administrative
process, as otherwise required by law, or unless such information (i) is or
becomes generally available to the public other than as a result of its
disclosure, (ii) is independently acquired or developed by it or any of
their representatives without violating any confidentiality agreement
between it and the other, or (iii) is, or becomes, available to it from a
source other than the other party or its representatives, provided that
such source is not known by such disclosing party, any of its subsidiaries
of any of its representatives to be bound by a confidentiality agreement
with the other party or any of its representatives or by any other legal,
contractual or fiduciary duty not to disclose such information) and shall
not, and shall use commercially reasonable best efforts to cause such
subsidiaries, officers, directors, employees and authorized representatives
not to, disclose such information to others without the prior written
consent of the other party.
9.11.2. If this Agreement is terminated, each of ROHN and PIROD shall,
if so requested by the other party, promptly return every document
furnished to its or its affiliates in connection with the transactions
contemplated by this Agreement and any copies of such documents that may
have been made and shall use its commercially reasonable best efforts to
cause the representatives to whom such documents were furnished promptly to
return such documents and any copies of such documents, other than
documents filed with the SEC or otherwise publicly available.
9.12. Knowledge. "To the knowledge," "to the best knowledge," or any similar
phrase shall be deemed to refer to the knowledge of the chief executive,
financial, accounting and legal officers of a party (regardless of title) and
to exclude the assurance that such knowledge is based upon a reasonable
investigation, unless otherwise expressly provided.
In Witness Whereof, the undersigned have duly executed this Agreement as of
the date first above written.
ROHN Industries, Inc.
/s/ Brian B. Pemberton
By __________________________________
Its President
PiRod Holdings, Inc.
/s/ Marc Wolpow
By __________________________________
Its President
A-33
<PAGE>
Appendix B
ROHN INDUSTRIES, INC.
1999 STOCK OPTION PLAN
Section 1. Purpose. The purpose of the Rohn Industries, Inc. 1999 Stock
Option Plan (this "Plan") is to benefit Rohn Industries, Inc. (the "Company")
and its subsidiaries by offering certain present and future employees,
including officers, a favorable opportunity to become holders of stock in the
Company over a period of years, thereby giving them a stake in the growth and
prosperity of the Company and encouraging the continuance of their services
with the Company or its subsidiaries.
Section 2. Administration.
2.1 Committee. This Plan shall be administered by the Compensation Committee
(the "Committee") of the Board of Directors of the Company (the "Board"). The
Committee's interpretation and construction of any terms or provisions of this
Plan or any option issued hereunder, or of any rule or regulation adopted in
connection therewith, shall be conclusive and binding on all interested
parties, so long as such interpretation and construction with respect to
incentive stock options corresponds to the requirements of Section 422 of the
Internal Revenue Code, as amended (the "Code") and the regulations thereunder.
2.2 Grants to Section 16 Persons. For so long as the Company's Common Stock
is registered under Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Committee may not grant options to an officer
of the Company subject to Section 16 of the Exchange Act unless the grant is
(i) approved in advance by the Committee in accordance with the provisions of
Rule 16b-3(d)(1) under the Exchange Act (where the Committee is composed solely
of two or more non-employee directors who satisfy the requirements of Rule 16b-
3(b)(3) under the Exchange Act), (ii) approved in advance, or subsequently
ratified by the stockholders in accordance with the provisions of Rule 16b-
3(d)(2) under the Exchange Act or (iii) absent approval pursuant to clauses (i)
or (ii), no officer of the Company may sell shares received upon the exercise
of an option during the six-month period immediately following the grant of
such option.
2.3 Grants to Section 162(m) Officers. The Board may not grant options to an
officer subject to Section 162(m) of the Code unless the grant is approved by
the Committee where the Committee is composed of at least two "outside
directors" (as defined in the regulations promulgated under Section 162(m) of
the Code).
2.4 Section 16(b) Compliance and Bifurcation of Plan. It is the intention of
the Company that this Plan comply in all respects with Section 16(b) and Rule
16b-3 under the Exchange Act, to the extent applicable, and, if any Plan
provision is later found not to be in compliance with such Section or Rule, the
provision shall be deemed null and void, and the Plan shall be construed in
favor of its meeting the requirements of Section 16(b) and Rule 16b-3 under the
Exchange Act. Notwithstanding anything in the Plan to the contrary, the
Committee, in its absolute discretion, may bifurcate the Plan so as to limit
the use of any provision of the Plan to participants who are executive officers
or other persons subject to Section 16(b) of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to other
participants.
Section 3. Stock Subject to This Plan. The stock subject to this Plan shall
be the Company's common stock, par value $.01 per share (the "Common Stock"),
authorized but unissued or held in the Company's treasury or subsequently
acquired by the Company. Subject to adjustment as provided in Section 7 hereof,
the aggregate amount of Common Stock to be delivered upon the exercise of all
options granted under this Plan shall not exceed 2,500,000 shares as such
Common Stock was constituted on the effective date of this Plan. If any option
granted under this Plan shall expire, or be surrendered, exchanged for another
option, canceled or terminated for any reason without having been exercised in
full, the unpurchased shares subject thereto shall thereupon again be available
for purposes of this Plan, including for replacement options which may be
granted in exchange for such surrendered, canceled or terminated options.
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<PAGE>
Section 4. Eligibility. An incentive stock option may be granted only to an
individual who, at the time the option is granted, is an employee of the
Company or any subsidiary. A nonqualified stock option may be granted to any
employee of the Company or any subsidiary, whether an individual or an entity.
Any party to whom an option is granted under this Plan shall be referred to
hereinafter as an "Optionee."
Section 5. Terms and Conditions of Options. Options granted under this Plan
shall contain such terms, conditions, limitations and restrictions as the
Committee shall deem advisable and which are not inconsistent with this Plan.
Notwithstanding the foregoing, options shall include or incorporate by
reference the following terms and conditions:
5.1 Number of Shares and Price. The maximum number of shares that may be
purchased pursuant to the exercise of each option and the price per share at
which such option is exercisable (the "exercise price") shall be as established
by the Committee, provided that the Committee shall act in good faith to
establish an exercise price which shall be not less than the fair market value
per share of the Common Stock at the time the option is granted with respect to
incentive stock options and not less than 85% of the fair market value per
share of the Common Stock at the time the option is granted with respect to
nonqualified stock options and also provided that, with respect to incentive
stock options granted to greater than 10% stockholders, the exercise price
shall be as required by Section 6. In addition, in any five-year period, no
individual may be granted options under the Plan to purchase more than
1,000,000 shares of Common Stock, subject to adjustment as set forth in Section
7.
5.2 Term and Maturity. Subject to the restrictions contained in Section 6
with respect to granting incentive stock options to greater than 10%
stockholders, the term of each incentive stock option shall be as established
by the Committee and, if not so established, shall be 10 years from the date it
is granted but in no event shall the term of any incentive stock option exceed
10 years. The term of each nonqualified stock option shall be as established by
the Committee and, if not so established, shall be 10 years from the date it is
granted. To ensure that the Company or its subsidiaries will achieve the
purpose and receive the benefits contemplated in this Plan, any option granted
to any Optionee hereunder shall, unless the condition of this sentence is
waived by resolution adopted by the Committee, be exercisable according to the
following schedule:
<TABLE>
<CAPTION>
Period of Optionee's
Continuous Employment
With the Company or Related
Corporation From the Date Portion of Total Option
the Option is Granted Which is Exercisable
--------------------------- -----------------------
<S> <C>
after 1 year 33 1/3%
after 2 years 66 2/3%
after 3 years 100 %
</TABLE>
5.3 Exercise. Subject to the vesting schedule described in Section 5.2
above, each option may be exercised in whole or in part; provided, however,
that no fewer than 100 shares (or the remaining shares then purchasable under
the option, if less than 100 shares) may be purchased upon any exercise of
option rights hereunder and that only whole shares will be issued pursuant to
the exercise of any option. Options shall be exercised by delivery to the
Company of notice of the number of shares with respect to which the option is
exercised, together with payment of the exercise price.
5.4 Payment of Exercise Price. Payment of the option exercise price shall be
made in full at the time the notice of exercise of the option is delivered to
the Company and shall be in cash, bank certified or cashier's check or personal
check (unless at the time of exercise the Committee in a particular case
determines not to accept a personal check) for the Common Stock being
purchased.
The Committee can determine at the time the option is granted for incentive
stock options, or at any time before exercise for nonqualified stock options,
that additional forms of payment will be permitted. To the extent permitted by
the Committee and applicable laws and regulations (including, but not limited
to, federal tax and securities laws and regulations and state corporate law),
an option may be exercised by:
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<PAGE>
(a) delivery of shares of Common Stock held by an Optionee having a fair
market value equal to the exercise price, such fair market value to be
determined in good faith by the Committee;
(b) delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker, all in accordance with the
regulations of the Federal Reserve Board, to promptly deliver to the
Company the amount of sale or loan proceeds to pay the exercise price and
any federal, state or local withholding tax obligations that may arise in
connection with the exercise; provided, that the Committee, in its sole
discretion, may at any time determine that this subparagraph (b), to the
extent the instructions to the broker call for an immediate sale of the
shares, shall not be applicable to any Optionee whose employment with the
Company has terminated prior to the time of exercise; or
(c) delivery of a properly executed exercise notice together with
instructions to the Company to withhold from the shares that would
otherwise be issued upon exercise that number of shares having a fair
market value equal to the option exercise price.
5.5 Withholding Tax Requirement. The Company or any subsidiary shall have
the right to retain and withhold from any payment of cash or Common Stock under
the Plan the amount of taxes required by any government to be withheld or
otherwise deducted and paid with respect to such payment. At its discretion,
the Company may require an Optionee receiving shares of Common Stock to
reimburse the Company for any such taxes required to be withheld by the Company
and withhold such shares in whole or in part until the Company is so
reimbursed. In lieu thereof, the Company shall have the right to withhold from
any other cash amounts due or to become due from the Company to the Optionee an
amount equal to such taxes or retain and withhold a number of shares having a
market value not less than the amount of such taxes required to be withheld by
the Company to reimburse the Company for any such taxes and cancel (in whole or
in part) any such shares so withheld. If required by Section 16(b) of the
Exchange Act, the election to pay withholding taxes by delivery of shares held
by any person who at the time of exercise is subject to Section 16(b) of the
Exchange Act, shall be made either six months prior to the date the option
exercise becomes taxable or at such other times as the Company may determine as
necessary to comply with Section 16(b) of the Exchange Act.
5.6 Assignability and Transferability of Option. Options granted under this
Plan and the rights and privileges conferred hereby may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than (i) by will or by the applicable laws of descent and
distribution, (ii) pursuant to a property settlement in connection with a
divorce proceeding, or (iii) as otherwise determined by the Committee by
resolution. Any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of any option under this Plan or of any right or privilege conferred
hereby, contrary to the Code or to the provisions of this Plan, or the sale or
levy or any attachment or similar process upon the rights and privileges
conferred hereby shall be null and void. The designation by an Optionee of a
beneficiary does not, in and of itself, constitute an impermissible transfer
under this Section.
5.7 Termination of Employment. If the Optionee's employment with the Company
or any subsidiary ceases for any reason other than termination for cause, death
or total disability, and unless by its terms the option sooner terminates or
expires, then the Optionee may exercise, for an 18-month period (and, in the
case of incentive stock options, for a three-month period), that portion of the
Optionee's option which is exercisable at the time of such cessation, but the
Optionee's option shall terminate at the end of the 18-month period (three-
month period for incentive stock options) following such cessation as to all
shares for which it has not theretofore been exercised, unless such provision
is waived by resolution adopted by the Committee within 90 days of such
cessation.
If an Optionee is terminated for cause, any option granted hereunder shall
automatically terminate as of the first discovery by the Company of any reason
for termination for cause, and such Optionee shall thereupon have no right to
purchase any shares pursuant to such option. "Termination for cause" shall mean
dismissal for dishonesty, conviction or confession of a crime punishable by law
(except minor violations), fraud, misconduct or unauthorized disclosure of
confidential information. If an Optionee's employment with the Company or any
subsidiary is suspended pending an investigation of whether or not the Optionee
shall be
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<PAGE>
terminated for cause, all Optionee's rights under any option granted hereunder
likewise shall be suspended during the period of investigation.
If an Optionee's employment with the Company or any subsidiary ceases
because of a total disability, the Optionee's option shall not terminate until
the end of the 18-month period and, in the case of an incentive stock option,
shall not cease to be treated as an incentive stock option until the end of the
12-month period, following such cessation (unless by its terms it sooner
terminates and expires). As used in this Plan, the term "total disability"
refers to a mental or physical impairment of the Optionee which is expected to
result in death or which has lasted or is expected to last for a continuous
period of 12 months or more and which causes the Optionee to be unable, in the
opinion of the Company and two independent physicians, to perform his or her
duties for the Company and to be engaged in any substantial gainful activity.
Total disability shall be deemed to have occurred on the first day after the
Company and the two independent physicians have furnished their opinion of
total disability to the Committee.
For purposes of this Section 5.7, a transfer of employment between or among
the Company and/or any subsidiary shall not be deemed to constitute a cessation
of employment with the Company or any subsidiary. For purposes of this Section
5.7, with respect to incentive stock options, employment shall be deemed to
continue while the Optionee is on military leave, sick leave or other bona fide
leave of absence (as determined by the Committee). The foregoing
notwithstanding, employment shall not be deemed to continue beyond the first 90
days of such leave, unless the Optionee's reemployment rights are guaranteed by
statute or by contract.
5.8 Death of Optionee. If an Optionee dies while he or she is employed by
the Company or any subsidiary or within the 12-month period following cessation
of such employment, any option held by such Optionee to the extent that the
Optionee would have been entitled to exercise such option, may be exercised
within 12 months after his or her death by the personal representative of his
or her estate or by the person or persons to whom the Optionee's rights under
the option shall pass by will or by the applicable laws of descent and
distribution.
5.9 Status of Shareholder. Neither the Optionee nor any party to which the
Optionee's rights and privileges under the option may pass shall be, or have
any of the rights or privileges of, a shareholder of the Company with respect
to any of the shares issuable upon the exercise of any option granted under
this Plan unless and until such option has been exercised.
5.10 Continuation of Employment. Nothing in this Plan or in any option
granted pursuant to this Plan shall confer upon any Optionee any right to
continue in the employ of the Company or of a subsidiary, or to interfere in
any way with the right of the Company or of any such subsidiary to terminate
his or her employment with the Company at any time.
5.11 Modification and Amendment of Option. Subject to the requirements of
Code Section 422 with respect to incentive stock options and to the terms and
conditions and within the limitations of this Plan, the Committee may modify or
amend outstanding options granted under this Plan. The modification or
amendment of an outstanding option shall not, without the consent of the
Optionee, impair or diminish any of his or her rights or any of the obligations
of the Company under such option. Except as otherwise provided in this Plan, no
outstanding option shall be terminated without the consent of the Optionee.
Unless the Optionee agrees otherwise, any changes or adjustments made to
outstanding incentive stock options granted under this Plan shall be made in
such a manner so as not to constitute a "modification" as defined in Code
Section 424(h) and so as not to cause any incentive stock option issued
hereunder to fail to continue to qualify as an incentive stock option as
defined in Code Section 422(b).
5.12 Limitation on Value for Incentive Stock Options. As to all incentive
stock options granted under the terms of this Plan, to the extent that the
aggregate fair market value (determined at the time the incentive stock option
is granted) of the stock with respect to which incentive stock options are
exercisable for the first time by the Optionee during any calendar year (under
this Plan and all other incentive stock option
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<PAGE>
plans of the Company, a subsidiary or a predecessor corporation) exceeds
$100,000, such options shall be treated as nonqualified stock options. The
previous sentence shall not apply if the Code is amended or if the Internal
Revenue Service publicly rules, issues a private ruling to the Company, any
Optionee, or any legatee, personal representative or distributee of an Optionee
or issues regulations, changing or eliminating such annual limit, in which case
the limitation shall be that provided by the Code or the Internal Revenue
Service, as the case may be.
5.13 Valuation of Common Stock Received Upon Exercise
5.13.1 Exercise of Options Under Sections 5.4(a) and (c). The value of
Common Stock received by the Optionee from an exercise under Sections
5.4(a) and 5.4(c) hereof shall be the fair market value as determined by
the Committee, provided that, if the Common Stock is traded in a public
market, such valuation shall be the average of the high and low trading
prices or bid and asked prices, as applicable, of the Common Stock for the
date of receipt by the Company of the Optionee's delivery of shares under
Section 5.4(a) hereof or delivery of the exercise notice under Section
5.4(c) hereof.
5.13.2 Exercise of Option Under Section 5.4(b). The value of Common
Stock received by the Optionee from an exercise under Section 5.4(b) hereof
shall equal (a) in the case of the sale of the Common Stock received as a
result of the exercise by a broker on the date of receipt by the Company of
the Optionee's exercise notice, the sales price received for such shares;
and (b) in all other cases, the average of the high and low trading prices
or bid and asked prices, as applicable, of the Common Stock for the date of
receipt by the Company of the Optionee's exercise notice.
Section 6. Greater Than 10% Stockholders.
6.1 Exercise Price and Term of Incentive Stock Options. If incentive stock
options are granted under this Plan to employees who own more than 10% of the
total combined voting power of all classes of stock of the Company or any
subsidiary, the term of such incentive stock options shall not exceed five
years and the exercise price shall be not less than 110% of the fair market
value of the Common Stock at the time the incentive stock option is granted.
This provision shall control notwithstanding any contrary terms contained in
any other document. The term and exercise price limitations of this provision
shall be amended to conform to any change required by a change in the Code or
by a ruling or pronouncement of the Internal Revenue Service.
6.2 Attribution Rule. For purposes of Section 6.1, in determining stock
ownership, an employee shall be deemed to own the stock owned, directly or
indirectly, by or for his or her brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries. If an
employee or a person related to the employee owns an unexercised option or
warrant to purchase stock of the Company, the stock subject to that portion of
the option or warrant which is unexercised shall not be counted in determining
stock ownership. For purposes of this Section 6, stock owned by an employee
shall include all stock owned by him which is actually issued and outstanding
immediately before the grant of the incentive stock option to the employee.
Section 7. Adjustment.
7.1 Upon Changes in Capitalization. The aggregate number and class of shares
for which options may be granted under this Plan, the number and class of
shares covered by each outstanding option, and the exercise price per share
thereof (but not the total price), and each such option, shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a split-up or consolidation of shares or
any like capital adjustment, or the payment of any stock dividend.
7.2 Effect of Change in Control.
7.2.1 Any option previously granted to any Optionee who is an employee
of the Company or any subsidiary on the date of a "Change in Control" shall
be immediately exercisable in full on or after such
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<PAGE>
date during its term, without regard to any time of exercise established
under Section 5 hereof. "Change in Control" shall mean the occurrence, at
any time during the specified term of an option granted under the Plan, of
any of the following events:
(i) The acquisition, by a person or group of persons acting in
concert, of a beneficial ownership interest in the Company, resulting
in the total beneficial ownership of such persons or group of persons
equaling or exceeding 50% of the outstanding Common Stock; provided,
however, that no such person or group of persons shall be deemed to
beneficially own (i) any Common Stock acquired directly from the
Company or (ii) any Common Stock held by the Company or any subsidiary
or any employee benefit plan (or any related trust) of the Company or
its subsidiaries. The Change in Control shall be deemed to occur on the
date the beneficial ownership of the acquiring person or group of
persons first equals or exceeds 50% of the outstanding Common Stock.
(ii) A change, within any period of 24 months or less, in the
composition of the Board such that at the end of such period a majority
of the directors who are then serving were not serving at the beginning
of such period, unless at the end of such period the majority of the
directors in office were nominated upon the recommendation of a
majority of the Board at the beginning of such period. The Change in
Control shall be deemed to occur on the date the last director
necessary to result in a Change in Control takes office or resigns from
office, as applicable.
(iii) Approval by shareholders of the Company of a merger,
consolidation or other reorganization having substantially the same
effect, or the sale of all or substantially all the consolidated assets
of the Company in each case, with respect to which the persons or group
of persons who were the respective beneficial owners of the Common
Stock immediately prior to such event do not, following such event,
beneficially own, directly or indirectly, more than 50% of the then
outstanding voting securities of the Company resulting from such event
or the Company purchasing or receiving assets pursuant to such event.
If more than one of the foregoing events shall occur, each such event
shall constitute a separate Change in Control.
7.2.2 Notwithstanding any other provisions in the Plan, prior to the
passage of one year from and after any Change in Control, each Optionee
shall have the right to require the Company (or, if the Company is not the
survivor of a merger, consolidation or reorganization with an acquiror, the
acquiror) to purchase from him or her any or all unexercised options
granted under this Plan at a purchase price equal to (i) the excess of the
fair market value per share over the exercise price multiplied by (ii) the
number of option shares specified by the Optionee for purchase in a written
notice to the Company (or, if the Company is not the survivor of a merger,
consolidation or reorganization with an acquiror, the acquiror), attention
of the Secretary.
7.2.3 For purposes of Section 7.2.2 above, "fair market value per share"
shall mean, (i) except in the case of a merger, consolidation or
reorganization with an acquiror in which the Company is not the survivor (a
"Termination Merger"), the higher of (A) the average of the highest sales
price per share of the Company's Common Stock on the NASDAQ Stock Market
(as reported in The Wall Street Journal, Midwest Edition) (or, if the
Company's Common Stock is not then traded on the NASDAQ Stock market, on
the principal market where such Common Stock is actively traded) on each of
the five trading days immediately preceding the date the Optionee so
notifies the Company or (B) the average of the highest sales price per
share of the Company's Common Stock on the NASDAQ Stock Market (as reported
in The Wall Street Journal, Midwest Edition) (or, if the Company's Common
Stock is not then traded on the NASDAQ Stock Market, reported on the
principal market where such Common Stock is actively traded) on each of the
five trading days immediately preceding the date of the Change in Control,
and (ii) in the case of a Termination Merger, the higher of (C) the fair
market value of the consideration receivable per share by holders of Common
Stock in such Termination Merger, which fair market value as to any
securities included in such consideration shall be the average of the
highest sales price per unit of such security on the NASDAQ Stock Market
(as reported in The Wall Street Journal, Midwest Edition) (or, if
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<PAGE>
such security is not then traded on the NASDAQ Stock Market, reported on
the principal market where such security is actively traded) on each of the
five trading days immediately preceding the date of the Termination Merger
and as to any such security not actively traded in any market and as to all
other property included in such consideration, shall be the amount
determined by the Committee in its discretion or (D) the amount determined
pursuant to Clause (i)(B) of this Section 7.2.3. The amount payable to each
Optionee by the Company or acquiror, as the case may be, shall be in cash
or by certified check and shall be reduced by any taxes required to be
withheld.
7.3 Fractional Shares. In the event of any adjustment in the number of
shares covered by an option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the
number of full shares resulting from such adjustment.
7.4 Determination of Committee to Be Final. All Section 7 adjustments shall
be made by the Committee, and its determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. Unless an
Optionee agrees otherwise, any change or adjustment to an incentive stock
option shall be made in such a manner so as not to constitute a "modification"
as defined in Code Section 424(h) and so as not to cause his or her incentive
stock option issued hereunder to fail to continue to qualify as an incentive
stock option as defined in Code Section 422(b).
Section 8. Securities Regulation. Shares shall not be issued with respect to
an option granted under this Plan unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the Exchange Act, the
rules and regulations promulgated thereunder, and the requirements of any stock
exchange or inter-dealer quotation system upon which the shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance, including the availability of an exemption
from registration for the issuance and sale of any shares hereunder. Inability
of the Company to obtain from any regulatory body having jurisdiction the
authority deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any shares hereunder or the unavailability of an exemption
from registration for the issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been obtained.
As a condition to the exercise of an option, the Company may require the
Optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present
intention to sell or distribute such shares if, in the opinion of counsel for
the Company, such representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order
against any shares of stock may be placed on the official stock books and
records of the Company, and a legend indicating that the stock may not be
pledged, sold or otherwise transferred unless an opinion of counsel is provided
(concurred in by counsel for the Company) stating that such transfer is not in
violation of any applicable law or regulation, may be stamped on stock
certificates in order to assure exemption from registration. The Company may
also require such other action or agreement by the Optionees as it may from
time to time deem to be necessary or advisable. THE COMPANY SHALL NOT BE
OBLIGATED, BY REASON OF THIS PROVISION OR OTHERWISE, TO UNDERTAKE REGISTRATION
OF THE OPTIONS OR STOCK HEREUNDER.
Should any of the Company's capital stock of the same class as the stock
subject to options granted hereunder be listed on a national securities
exchange or inter-dealer quotation system, shares shall not be issued with
respect to an option granted this Plan unless, prior to issuance, such exchange
or inter-dealer quotation system shall have authorized the listing of the
shares thereon.
Section 9. Amendment and Termination.
9.1 Board Action. The Board may at any time suspend, amend or terminate this
Plan, provided that except as set forth in Section 7, the approval of the
holders of a majority of the Company's outstanding shares
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<PAGE>
of voting capital stock present and entitled to vote at any meeting is
necessary for the adoption by the Board of any amendment which will:
(a) increase the number of shares which are to be reserved for the
issuance of options under this Plan;
(b) permit the granting of stock options to a class of persons other
than those currently permitted to receive stock options under this Plan; or
(c) require shareholder approval under applicable law, including Section
16(b) of the Exchange Act.
9.2 Automatic Termination. Unless sooner terminated by the Board, this Plan
shall terminate ten years from the earlier of (a) the date on which this Plan
is adopted by the Board or (b) the date on which this Plan is approved by the
stockholders of the Company. No option may be granted after such termination
or during any suspension of this Plan. The amendment or termination of this
Plan shall not, without the consent of the option holder, alter or impair any
rights or obligations under any option theretofore granted under this Plan.
Section 10 Effectiveness Of This Plan. This Plan shall become effective
upon adoption by the Board so long as it is approved by the holders of a
majority of the Company's outstanding shares of voting capital stock present
and entitled to vote at any meeting at any time within 12 months before or
after the adoption of this Plan. Options may be granted hereunder prior to
such stockholder approval, but subject thereto.
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Appendix C
Donaldson, Lufkin & Jenrette
Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue, New York, New York 10172 . (212) 892-3000
Michael a. Wildish
Managing Director
Investment Banking
(212) 892-3559 . Fax (212) 892-7272
December 22, 1998
Board of Directors
ROHN Industries, Inc.
6718 West Plank Road
Peoria, IL 61604
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the holders of common stock, $.01 par value per share ("Company Common
Stock") of ROHN Industries, Inc. (the "Company") of the aggregate consideration
to be received by such stockholders pursuant to the terms of the Agreement and
Plan of Merger, dated as of December 17, 1998 (the "Agreement"), between the
Company and PiRod Holdings, Inc. ("PiRod"), pursuant to which PiRod will be
merged with and into ROHN (the "Merger").
Pursuant to the Agreement, (i) each share of Company Common Stock with
respect to which a cash election has been made not revoked (as further
described in the Agreement) will be converted into the right to receive $3.78
(the "Cash Consideration"); provided that no more than $105 million (and, in
certain cases, less than $105 million) will be paid in the aggregate pursuant
to such cash election and in the event holders of shares of Company Common
Stock elect, in the aggregate, to receive more than $105 million (or such
lesser amount), such elections will be pro rated such that no more than $105
(or such lesser amount) million is paid pursuant to such cash election; and
(ii) any shares of Company Common Stock for which such cash election in not
elected or effected shall remain outstanding such that such shares of Company
Common Stock shall represent, immediately following consummation of the Merger,
no less than 76.0% of the outstanding Company Common Stock (such retained
portion of Company Common Stock, together with the Cash Consideration, together
the "Consideration Package").
In arriving at our opinion, we have reviewed the draft dated December 17,
1998, of the Agreement, the draft dated December 16, 1998, of the UNR Asbestos-
Disease Claims Trust's Voting Agreement, and the draft dated December 17, 1998,
of the PiRod Shareholders Voting Agreement. We also have reviewed financial and
other information that was publicly available or furnished to us by the Company
and PiRod, including information provided during discussions with their
respective managements. Included in the information provided during discussions
with the respective managements were certain financial projections of the
Company for the period beginning January 1, 1998 and ending December 31, 2002,
prepared by the management of the Company and certain financial projections of
PiRod for the period beginning January 1, 1998 and ending December 31, 2002
prepared by the management of PiRod and certain financial projections for the
combined company for the period beginning January 1, 1998 and ending December
31, 2002 prepared by the managements of the Company and PiRod. In addition, we
have compared certain financial and securities data of the Company and certain
financial data of PiRod with various other companies whose securities are
traded in public markets, reviewed the historical stock prices and trading
volumes of Company Common Stock, reviewed prices and premiums paid in certain
other business combinations and conducted such other financial studies,
analyses and investigations as we deemed appropriate for purposes of this
opinion.
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Board of Directors December 22, 1998
ROHN Industries, Inc.
Page 2
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to us from public sources, that was provided to us by the Company and PiRod and
their respective representatives, or that was otherwise reviewed by us. In
particular, we have relied upon the estimates of the management of the Company
of the operating synergies achievable as a result of the Merger and upon our
discussion of such synergies with the management of PiRod. With respect to the
financial projections supplied to us, we have assumed that they have been
reasonably prepared on the basis reflecting the best currently available
estimates and judgments of the management of (i) the Company and PiRod as to
the future operating and financial performance of the Company and PiRod,
respectively, (ii) the managements of the Company and PiRod as to the future
operating and financial performance of the combined company. In addition, we
have assumed that $105 million will be available to be paid out to holders of
Company Common Stock pursuant to the cash election described above and that
such amount will have been so paid out. We have not assumed any responsibility
for making an independent evaluation of any assets or liabilities or for making
any independent verification of any of the information reviewed by us.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. We are expressing no opinion herein as to the
prices at which Company Common Stock will trade at any time. Our opinion does
not address the relative merits of the Merger and the other business strategies
being considered by the Company's Board of Directors, nor does it address the
Board's decision to proceed with the Merger. Our opinion does not constitute a
recommendation to any stockholder as to how such stockholder should vote on the
proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. DLJ has
performed investment banking and other services for affiliates of PiRod in the
past and has been compensated for such services.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the Consideration Package to be received and/or retained by
the holders of Company Common Stock pursuant to the Agreement is fair to such
holders from a financial point of view.
Very truly yours,
Donaldson, Lufkin & Jenrette
Securities Corporation
/s/ Michael A. Wildish
By: _________________________________
Michael A. Wildish
Managing Director
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law empowers the Registrant
to indemnify, subject to the standards set forth therein, any person in
connection with any action, suit or proceeding brought or threatened by reason
of the fact that he is or was a director, officer, employee or agent of the
Registrant, or is or was serving as such with respect to another entity at the
request of the Registrant. The Delaware General Corporation Law also provides
that the Registrant may purchase indemnification insurance on behalf of any
such director, officer, employee or agent. Section 102(b)(7) of the Delaware
General Corporation Law permits a corporation to provide in its certificate of
incorporation that a director of the corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
Article VIII of the Registrant's By-Laws provides that the Registrant shall
indemnify directors and officers to the full extent permitted by the Delaware
General Corporation Law and Article VII of the Registrant's Restated
Certificate of Incorporation and provides for the elimination of personal
liability of a director for breach of fiduciary duty, as permitted by Section
102(b)(7) of the Delaware General Corporation Law. Indemnification agreements
with certain of the Registrant's directors and officers have similar
provisions.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Under an insurance policy maintained by the Registrant, the directors and
officers of the Registrant are insured, within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of certain claims, actions, suits or proceedings, and certain
liabilities which might be imposed as a result of such claims, actions, suits
or proceedings, which may be brought against them by reason of being or having
been such directors or officers.
Item 21. Exhibits and Financial Statement Schedules.
(a) list of exhibits included as part of this Registration Statement is set
forth in the Exhibit Index appearing elsewhere herein, and is hereby
incorporated by reference herein.
(b) Not Applicable.
(c) The fairness opinion of Donaldson, Lufkin & Jenrette Securities
Corporation is attached to the Proxy Statement/Prospectus as Appendix C.
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<PAGE>
Item 22. Undertakings.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The Registrant undertakes that every prospectus: (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Exchange Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the Registration Statement when it became effective.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(b) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-4 and has duly caused this
Registration Statement, or amendment thereto, to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Chicago, State of
Illinois, on the 25th day of January, 1999.
Rohn Industries, Inc.
/s/ Brian B. Pemberton
By: _________________________________
Brian B. Pemberton
Chief Executive Officer, President
and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement, or amendment thereto, has been signed below by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Brian B. Pemberton President, Chief Executive January 25, 1999
____________________________________ Officer and Director
Brian B. Pemberton (Principal Executive
Officer)
/s/ David LaRusso Vice President and Chief January 25, 1999
____________________________________ Financial Officer
David LaRusso (Principal Financial and
Accounting Officer)
/s/ Darius W. Gaskins, Jr. Director January 25, 1999
____________________________________
Darius W. Gaskins, Jr.
/s/ Charles M. Brennan III Director January 25, 1999
____________________________________
Charles M. Brennan III
/s/ Gene Locks Director, Chairman of the January 25, 1999
____________________________________ Board
Gene Locks
/s/ Ruth R. McMullin Director January 25, 1999
____________________________________
Ruth R. McMullin
</TABLE>
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<PAGE>
ROHN Industries, Inc.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
2 (a) Agreement and Plan of Merger dated as of December 22, 1998,
between ROHN Industries, Inc. ("ROHN") and PiRod Holdings, Inc.
(incorporated by reference to Exhibit 99.1 to ROHN's Current Report
on Form 8-K filed December 28, 1998).
(b) Plan of Reorganization (incorporated herein by reference to
Exhibit A to ROHN's 1989 first quarter Form 10-Q).
3 Amended and Restated Certificate of Incorporation of ROHN dated
December 17, 1997 (incorporated herein by reference to Exhibit A to
ROHN's Current Report on Form 8-K filed on December 19, 1997).
4 (a) Loan Agreement dated March 9, 1998 by and among LaSalle National
Bank and ROHN (incorporated herein by reference to Exhibit 4 to
ROHN's 1997 Annual Report on Form 10-K).
(b) PiRod Shareholders Voting Agreement among ROHN, the UNR
Asbestos-Disease Claims Trust and the stockholders of PiRod
Holdings, Inc., dated December 22, 1998 (incorporated by reference
to Exhibit 99.2 to ROHN's Current Report on Form 8-K filed December
28, 1998).
(c) Stockholders Agreement among ROHN Industries, Inc., the UNR
Asbestos-Disease Claims Trust, Bain Capital Fund V, L.P., Bain
Capital Fund V-B, L.P., BCIP Trust Associates, L.P., Bain Capital V
Mezzanine Fund, L.P., BCM Capital Partners, L.P., BCIP Associates,
and PH, Inc., dated December 22, 1998 (incorporated herein by
reference to Exhibit 14 to Schedule 13D filed on behalf of UNR
Asbestos-Disease Claims Trust on December 29, 1998).
5 Opinion of Bell, Boyd & Lloyd (to be filed by amendment).
8 Opinion of Bell, Boyd & Lloyd as to the description in the Proxy
Statement/Prospectus forming a part of this Registration Statement
on Form S-4 of certain federal income tax consequences of the Merger
(to be filed by amendment).
11 Statement re Computation of Per Share Earnings (incorporated herein
by reference to 1997 Form 10-K and reports on Form 10-Q for the
first, second and third quarters of 1998).
23 (a) Consent of Bell, Boyd & Lloyd (to be included in Exhibit 5 and
Exhibit 8).
(b) Consent of Arthur Andersen LLP.
(c) Consent of PricewaterhouseCoopers LLP.
99 (a) Form of Proxy to be mailed to stockholders of ROHN Industries,
Inc.
(b) Form of Election Form to be mailed to stockholders of ROHN
Industries, Inc.
(c) ROHN Industries, Inc. 1999 Stock Option Plan.
(d) Trust Voting Agreement between the UNR Asbestos-Disease Claims
Trust and PiRod Holdings, Inc. dated December 22, 1998 (incorporated
by reference to Exhibit 13 to Schedule 13D filed on behalf of UNR
Asbestos-Disease Claims Trust on December 29, 1998).
(e) Consents of Director Nominees (to be filed by amendment).
</TABLE>
<PAGE>
EXHIBIT 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 of our report dated March
12, 1998, incorporated by reference in Rohn Industries, Inc.'s Form 10-K for
the year ended December 31, 1997 and to all references to our Firm included in
this registration statement.
Arthur Andersen LLP
Chicago, Illinois
January 22, 1999
<PAGE>
EXHIBIT 23 (c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Rohn Industries Inc. of our report dated
March 15, 1998 relating to the financial statement of PiRod Holdings, Inc.,
which appears in such Prospectus. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
January 22, 1999
<PAGE>
PROXY
ROHN INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS--MARCH 22, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Brian B. Pemberton and Gene Locks, and each
of them, with several powers of substitution, proxies to vote the shares of
Common Stock, $.01 par value per share, of ROHN Industries, Inc. that the
undersigned could vote if personally present at the Annual Meeting of
Stockholders of ROHN Industries, Inc. to be held at , Chicago,
Illinois , on Monday, March 22, 1999 at 10:00 a.m., local time, and any
adjournment thereof:
(Continued and to be signed on other side)
<PAGE>
ROHN INDUSTRIES, INC.
Mark your vote in oval using dark ink only.
- ---------------------
Common
1. Approval and adoption of the Agreement and Plan of Merger, dated as of
December 22, 1998, attached as Appendix A to the Proxy Statement/Prospectus
that has been transmitted in connection with the Annual Meeting, pursuant to
which PiRod Holdings, Inc. will merge with and into ROHN Industries, Inc.,
all as described in said Proxy Statement/Prospectus.
FOR AGAINST ABSTAIN
[_] [_] [_]
2. Election of Directors
Nominees:
John H. Laeri, Jr. Michael E. Levine Gene Locks
Darius W. Gaskins, Jr. Brian B. Pemberton Myron Noble
Paul H. Spinale [NAME] [NAME]
Marc B. Wolpow
FOR ALL NOMINEES
EXCEPT ANY WHOSE NAME
THE UNDERSIGNED HAS
FOR ALL CROSSED OUT WITHHOLD
[_] [_] [_]
3. Approval of the ROHN Industries, Inc. 1999 Stock Option Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. In their discretion, on any other matter that may properly come before the
meeting.
If no specific instructions are
provided, this proxy will be voted
FOR the nominees for directors and
FOR proposals 1 and 3.
Dated: ______________, 1999
Signature(s) ________________________
-------------------------------------
Please sign exactly as your name
appears and return this proxy
immediately in the enclosed reply
envelope.
<PAGE>
ELECTION FORM FOR HOLDERS OF COMMON STOCK
OF
ROHN INDUSTRIES, INC.
WHO WISH TO RECEIVE THEIR MERGER CONSIDERATION
IN THE FORM OF CASH
TO ACCOMPANY CERTIFICATES REPRESENTING COMMON STOCK
OF ROHN INDUSTRIES, INC. WHEN SUBMITTED IN CONNECTION
WITH THE MERGER OF PIROD HOLDINGS, INC. WITH AND INTO
ROHN INDUSTRIES, INC.
STOCKHOLDERS WHO WISH TO RETAIN THEIR ROHN SHARES NEED NOT
COMPLETE OR RETURN THIS FORM
This form (the "Election Form") is to accompany the certificate(s) for
shares of common stock, par value $.01 per share, of ROHN Industries, Inc.
("ROHN Common Stock") when submitted in order to make an unconditional election
(a "Cash Election") to receive cash (the "Cash Consideration"), subject to
proration, in connection with the proposed merger (the "Merger") of PiRod
Holdings, Inc. ("PiRod"), with and into ROHN Industries, Inc. ("ROHN") pursuant
to the Agreement and Plan of Merger dated as of December 22, 1998 (the "Merger
Agreement"). To be effective, a Cash Election pursuant to the terms and
conditions set forth herein, on this Election Form or a facsimile hereof,
accompanied by the certificate(s) representing shares of ROHN Common Stock (the
"Certificate(s)") described in Box I below, or a proper guarantee of delivery
thereof, must be received by First Chicago Trust Company of New York (the
"Exchange Agent"), at the address set forth below, no later than 5:00 p.m., New
York City time, on March 19, 1999 (the "Election Date").
First Chicago Trust Company of New York
By Mail:
By Hand:
By Overnight
Courier:
First Chicago Trust First Chicago Trust First Chicago
Company of New York Company of New York Trust
Corporate Actions Corporate Actions Company of New
Suite 4660 York
c/o Securities Transfer and Reporting Services, Inc.
P.O. Box 2569 100 William Street, Galleria Corporate
Jersey City, NY 07303- New York, NY 10038 Actions
2569
Suite 4680
Delivery of this Election Form, accompanied by Certificate(s), to an address
other than as set forth above does not constitute a valid delivery. Eligible
Institutions (as defined in Instruction D(7)) may deliver a guarantee of
delivery by facsimile. See Box V and Instruction D(1).
14 Wall Street,
8th Floor
New York, NY
10005
<PAGE>
Ladies and Gentlemen:
This Cash Election is subject to the terms and conditions in the Merger
Agreement and the Proxy Statement/Prospectus, dated February , 1999 (the
"Proxy Statement/Prospectus"), furnished to stockholders of ROHN and PiRod in
connection with the Merger, both of which are incorporated herein by reference.
Receipt of the Proxy Statement/Prospectus, including the Merger Agreement
attached as Appendix A thereto, is hereby acknowledged. Additional copies of
the Proxy Statement/Prospectus and this Election Form are available from First
Chicago Trust Company of New York, the transfer agent (the "Transfer Agent"),
at upon request.
The undersigned acknowledges and understands that: (i) the maximum number of
shares of ROHN Common Stock to be cashed out will be determined by dividing the
cash available from borrowings and cash on hand by $3.78, but in no event shall
be more than 27,777,777 shares; and (ii) the UNR Asbestos-Disease Claims Trust
has announced its intention to elect cash for all of its 29,348,051 shares of
ROHN Common Stock (approximately 55.5% of those outstanding); if it does so and
the Merger occurs, the cash to be delivered pursuant to Cash Elections will be
prorated among holders of ROHN Common Stock electing cash based on the
respective numbers of shares as to which Cash Elections have been made; and
(iii) based on such proration, some shares represented by the Certificate(s)
surrendered with this Election Form will not be cashed out and will be returned
to the undersigned or, if the undersigned has completed Special Payment
Instructions and/or Special Delivery Instructions, the undersigned's designee.
The undersigned represents and warrants (and if more than one, each
undersigned represents and warrants jointly and severally) that the undersigned
has full power and authority to assign and transfer the Certificate(s)
surrendered and that ROHN will acquire good title to such Certificate(s), free
and clear of all liens, restrictions, charges, encumbrances, pledges, security
interests or other obligations affecting the assignment or transfer of the
Certificate(s) and will not be subject to any adverse claim. All authority
conferred or agreed to be conferred in this Election Form shall not be affected
by, and shall survive, the death or incapacity of the undersigned, and any
obligation of the undersigned under this Election Form shall be binding upon
successors, assigns, heirs, executors, administrators and legal representatives
of the undersigned.
Upon request, the undersigned agrees to execute and deliver any additional
documents deemed reasonably necessary or desirable by ROHN or the Exchange
Agent to complete the exchange of the Certificate(s). If required by
Instruction D(7), the Certificate(s) submitted with this Election Form is/are
duly endorsed or in a form otherwise acceptable for transfer on the books of
ROHN.
Unless otherwise indicated under Special Payment Instructions below, please
make any check payable to the order of, and register any Certificate for
retained or non-cashed shares of ROHN Common Stock in the name of, the
registered holder(s) of the shares of ROHN Common Stock represented by the
Certificate(s) surrendered with this Election Form. Similarly, unless otherwise
indicated under Special Delivery Instructions, please mail any check payable
and any Certificate issuable for retained shares of ROHN Common Stock
represented by the Certificate(s) submitted with this Election Form to the
registered holder(s) of the shares of ROHN Common Stock at the address or
addresses shown in Box I below.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS
2
<PAGE>
Box I: Certificate(s) Surrendered.
Please list in this Box I all the Certificates representing any shares of
ROHN Common Stock for which you wish to make a Cash Election (all of which
should be submitted with this Election Form). If there is not enough space
below to list all the Certificates surrendered, please attach a separate sheet.
Submit a separate Election Form for shares of ROHN Common Stock registered in
different names (see Instruction D(4)). Any shares of ROHN Common Stock for
which a Cash Election is not properly made, or for which a Cash Election has
been properly revoked, in each case prior to 5:00 p.m., New York City time, on
the Election Date, will be retained and not converted into the right to receive
cash. You may make a Cash Election with respect to all or any portion of the
shares of ROHN Common Stock that you hold. Indicate in the space provided the
number of shares of ROHN Common Stock represented by each Certificate
surrendered for which a Cash Election is being made.
<TABLE>
<CAPTION>
Certificate(s) Enclosed
----------------------------------------------
<S> <C> <C> <C>
Number of shares
Name and Address of Registered Holder(s) Number of shares as to which
as shown on the share records Certificate represented by cash election is
(Fill in, if blank) Number each certificate made*
- -------------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Total Shares:
------------------------------------------------------------------------------------------
</TABLE>
* Unless otherwise indicated, it will be assumed that you have elected to
receive cash for all shares evidenced by each Certificate delivered to
the Exchange Agent.
Box II: Special Payment Instructions
(See Instructions D(6) and D(7)).
To be completed ONLY if the check
is to be made payable to the order
of, or the Certificate(s) for
retained shares of ROHN Common
Stock is/are to be issued to, a
person other than the person in
whose name the Certificate(s)
submitted is/are registered.
Name ______________________________
(Please type or print)
Address ___________________________
-----------------------------
(Zip Code)
-----------------------------------
(Tax Identification or Social Security No.)
Box III: Special Delivery Instructions
(See Instruction D(8)).
To be completed ONLY if the check
or the Certificate(s) for retained
shares of ROHN Common Stock is/are
to be sent to an address other
than the address of the registered
holder(s) set forth in Box I
above, or if Box II is completed,
to an address other than the
address appearing in
Box II.
Name ______________________________
(Please type or print)
Address ___________________________
-----------------------------
(Zip Code)
3
<PAGE>
Box IV: Sign here and, if required under Instruction D(7), have signatures
guaranteed by an eligible institution (see Instructions D(1) and D(7)
concerning signature guarantee).
----------------------------------- Name(s) ___________________________
----------------------------------- (Please print)
----------------------------------- Name(s) ___________________________
(Signature(s) of Owner(s)) (Please print)
Name(s) ___________________________
Must be signed by registered (Please print)
holder(s) exactly as name(s) Address ___________________________
appear on the Certificate(s) or by -----------------------------------
person(s) authorized to become -----------------------------------
registered holder(s) by the ((Area Code and Telephone
Certificate(s) and documents Number(s))
transmitted herewith. If signature -----------------------------------
is by a trustee, executor, -----------------------------------
administrator, guardian, officer -----------------------------------
of a corporation, attorney-in-fact (Employer Identification or Social
or any other person acting in a Security Number(s))
fiduciary capacity, set forth full
title in such capacity. See
Instruction D(3).
Date _______________________ , 1999
Signature(s) Guaranteed ___________
Box V: Guarantee of Delivery (Eligible Institutions Only).
(See Instruction D(7).)
To be used ONLY if Certificate(s) is/are not surrendered herewith.
Eligible Institutions May Deliver this Guarantee of Delivery
by Facsimile Transmission to:
(201) 222-4720 or (201) 222-4721
Confirm Facsimile by Telephone:
(201) 222-4707
The undersigned is an Eligible Firm _______________________________
Institution, and guarantees to (Please print)
deliver to the Exchange Agent the
Certificate(s) to which this
Election Form relates, duly
endorsed or in form otherwise
acceptable for transfer on the
books of ROHN, within three Nasdaq
trading days after the date of
execution of this Guarantee of
Delivery.
------------------------------------
(Authorized Signature)
------------------------------------
------------------------------------
------------------------------------
(Address)
------------------------------------
(Area Code and Telephone Number)
------------------------------------
(Contact Name)
4
<PAGE>
IMPORTANT TAX INFORMATION
PLEASE PROVIDE YOUR SOCIAL SECURITY NUMBER OR OTHER TAXPAYER IDENTIFICATION
NUMBER ON THIS SUBSTITUTE W-9 FORM AND CERTIFY THAT YOU ARE NOT SUBJECT TO
BACKUP WITHHOLDING. FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN
BACKUP WITHHOLDING OF UP TO 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO
THIS CASH ELECTION. IF THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9 IS CHECKED,
THE "CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER" BELOW MUST BE
COMPLETED.
PART 1--PLEASE
SUBSTITUTE PROVIDE YOUR TIN IN THE Social Security
Form W-9 BOX AT RIGHT AND CERTIFY Number or
Department of the BY SIGNING AND DATING Employer
Treasury BELOW. Identification
Internal Revenue Number
Service _____________________
Payer's Request for
Taxpayer ------------------------------------------------------
Identification PART 2--Check the box if you are not subject to
Number ("TIN") backup withholding because (1) you have not been
notified that you are subject to backup
withholding as a result of failure to report all
interest or dividends or (2) the Internal Revenue
Service has notified you that you are no longer
subject to backup withholding. [_]
SIGNATURE: ________________ DATE: ______, 1999
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
------------------------------------------------------
I certify, under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number to
the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a taxpayer
identification number by the time of payment, 31% of any cash payment made
to me will be withheld, but that such amount will be refunded to me if I
then provide a Taxpayer Identification Number within 60 days.
PART 3--Check the box if you have applied
for and are awaiting TIN [_]
------------------------------------------------------
Certification--UNDER PENALTIES OF PERJURY, I
CERTIFY THAT THE INFORMATION PROVIDED ON THIS
FORM IS TRUE, CORRECT AND COMPLETE.
SIGNATURE: __________________________ DATE: _____________________, 1999
5
<PAGE>
INSTRUCTIONS
A. SPECIAL CONDITIONS.
1. Time in Which to Elect. Any Cash Election will have been properly made
only if the Exchange Agent has received at the address set forth above, by 5:00
p.m., New York City time, on March 19, 1999, the Election Date, this Election
Form or a facsimile hereof properly completed and signed and accompanied by the
Certificate(s) to which the Election Form relates, properly endorsed or
otherwise in proper form for transfer. Holders of shares of ROHN Common Stock
whose Certificate(s) is/are not immediately available may also make an
effective Cash Election by completing this Election Form or facsimile hereof
and having the Guarantee of Delivery box (Box V) properly completed and duly
executed by an Eligible Institution, provided such Certificate(s) is/are in
fact delivered to the Exchange Agent within three Nasdaq trading days after the
date of execution of the guarantee of delivery. EACH SHARE OF ROHN COMMON STOCK
FOR WHICH AN EFFECTIVE CASH ELECTION IS NOT MADE PRIOR TO THE ELECTION DATE
WILL BE RETAINED. SEE INSTRUCTION B.
2. Revocation of Cash Election. Any holder of ROHN Common Stock who has made
a Cash Election by submitting an Election Form to the Exchange Agent may revoke
such Cash Election by written notice received by the Exchange Agent prior to
5:00 p.m., New York City time, on the Election Date. If an Election Form is
revoked, the Certificate(s) (or guarantee of delivery, as appropriate) to which
the Election Form relates will be promptly returned to the person submitting
the same to the Exchange Agent.
3. Termination of Election and Return of Certificates if Merger Abandoned.
All Election Forms will be automatically revoked if the Exchange Agent is
notified in writing by ROHN and PiRod that the Merger has been abandoned. In
such case, all Certificates (or guarantees of delivery, as appropriate) to
which the Election Forms relate will be promptly returned to the persons who
submitted the same to the Exchange Agent.
B. ELECTION AND PRORATION PROCEDURES.
This Election Form enables you to elect to receive the $3.78 per share of
ROHN Common Stock Cash Consideration, subject to proration, in exchange for
your shares of ROHN Common Stock. You may use this Election Form to make a Cash
Election with respect to all or any portion of the shares of ROHN Common Stock
that you hold. Each share of ROHN Common Stock for which an effective Cash
Election is not made, or for which an effective Cash Election has been properly
revoked, will be retained and not converted into the right to receive the Cash
Consideration.
This Cash Election is subject to the terms and conditions in the Merger
Agreement and the Proxy Statement/Prospectus, furnished to stockholders of ROHN
and PiRod in connection with the Merger, both of which are incorporated herein
by reference. By executing this Election Form, you acknowledge receipt of the
Proxy Statement/Prospectus, including the Merger Agreement attached as Appendix
A thereto. You may obtain additional copies of the Proxy Statement/Prospectus
and this Election Form by contacting the Transfer Agent at .
You should understand that: (i) the maximum number of shares of ROHN Common
Stock to be cashed out will be determined by dividing the cash available from
borrowings and cash on hand by $3.78, but in no event shall be more than
27,777,777 shares; and (ii) the UNR Asbestos-Disease Claims Trust has announced
its intention to elect cash for all of its 29,348,051 shares of ROHN Common
Stock (approximately 55.5% of those outstanding); if it does so and the Merger
occurs, the cash to be delivered pursuant to Cash Elections will be prorated
among holders of ROHN Common Stock electing cash based on the respective
numbers of shares as to which Cash Elections have been made; and (iii) based on
such proration, some shares represented by the Certificate(s) surrendered with
this Election Form will not be cashed out and will be returned to you or, if
you have completed Special Payment Instructions or Special Delivery
Instructions, your designee.
6
<PAGE>
IN CONNECTION WITH MAKING A CASH ELECTION, A HOLDER OF ROHN COMMON STOCK SHOULD
READ THE PROXY STATEMENT/PROSPECTUS CAREFULLY, INCLUDING THE DESCRIPTION OF THE
PRORATION AND ELECTION PROCEDURES SET FORTH UNDER "THE MERGER--ELECTION
PROCEDURE" AND IN THE MERGER AGREEMENT ATTACHED AS APPENDIX A TO THE PROXY
STATEMENT/PROSPECTUS, AND THE INFORMATION CONTAINED IN THE PROXY STATEMENT
UNDER "THE MERGER--CERTAIN FEDERAL INCOME TAX CONSEQUENCES."
AS A RESULT OF THE PRORATION DESCRIBED IN THE MERGER AGREEMENT, HOLDERS OF
SHARES OF ROHN COMMON STOCK WILL RECEIVE CASH IN AMOUNTS THAT VARY FROM THE
AMOUNTS SUCH HOLDERS ELECT TO RECEIVE. SUCH HOLDERS WILL NOT BE ABLE TO CHANGE
THE AMOUNTS OF CASH ALLOCATED TO THEM PURSUANT TO SUCH PRORATION.
C. MAILING OF CHECKS AND CERTIFICATES.
As soon as practicable after the Merger has become effective and surrender
to the Exchange Agent, pursuant to these instructions, of the Certificate(s)
for shares with respect to which a holder or holders have made a Cash Election,
the Exchange Agent will mail to the holder or holders cash payments by check
and Certificate(s) for shares not cashed out as a result of proration. HOLDERS
OF SHARES OF ROHN COMMON STOCK FOR WHICH AN EFFECTIVE CASH ELECTION HAS NOT
BEEN MADE, OR FOR WHICH A CASH ELECTION HAS BEEN PROPERLY REVOKED, WILL NOT
RECEIVE CASH.
D. GENERAL.
1. Execution and Delivery. This Election Form or a facsimile hereof must be
properly completed, dated and signed in Box IV, and must be delivered, together
with the Certificate(s) representing the shares of ROHN Common Stock for which
the Cash Election is made (or with a duly executed guarantee of delivery of
such Certificate(s)) to the Exchange Agent at the appropriate address set forth
above.
The method of delivery of all documents to be delivered to the Exchange
Agent is at the option of the stockholder. The risk of loss of the
Certificate(s) shall pass only upon delivery of such Certificate(s) to the
Exchange Agent. If sent by mail, registered mail with return receipt requested
and proper insurance, is suggested. Stockholders using the mail should also
allow sufficient time to ensure timely delivery.
2. Inadequate Space. If there is insufficient space on this Election Form to
list all the Certificates you are submitting to the Exchange Agent, please
attach a separate list.
3. Signatures. The signature (or signatures, in the case of Certificates
owned by two or more joint holders) on this Election Form should correspond
exactly to the name(s) as written on the face of the Certificate(s) submitted
unless the shares of ROHN Common Stock described on this Election Form have
been assigned by the registered holder(s), in which event this Election Form
should be signed in exactly the same form as the name of the last transferee
indicated on the transfers attached to or endorsed on the Certificate(s).
If this Election Form is signed by a person or persons other than the
registered owners of the Certificate(s) listed, the Certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered owner(s) appears on the
Certificate(s).
If this Election Form, any Certificate or any stock power is signed by a
trustee, executor, administrator, guardian, officer of a corporation, attorney-
in-fact or any other person acting in a representative or fiduciary capacity,
the person signing must give such person's full title in such capacity and
appropriate evidence of authority to act in such capacity must be forwarded
with this Election Form.
7
<PAGE>
4. Shares Registered in Different Names. If shares of ROHN Common Stock are
registered in different names on several Certificates, it will be necessary to
complete, sign and submit a separate Election Form for each different
registration. For example, if some Certificates are registered in your name,
some are registered in your spouse's name and some are registered jointly,
three separate Election Forms must be submitted.
5. Lost, Stolen or Destroyed Certificates. If your Certificate(s) has/have
been lost, stolen or destroyed, please contact the Transfer Agent at
. You will then be instructed as to the steps you must take in order
to receive cash payments by check and Certificate(s) for retained or non-cashed
shares in accordance with the Merger Agreement.
6. Checks and Certificates in Same Name. If the check is to be made payable
to the order of, and Certificate(s) for retained or non-cashed shares is/are to
be issued to, the person(s) whose name(s) appear(s) on the Certificate(s)
submitted with this Election Form, no endorsement of the Certificate(s) or
separate stock power(s) is required.
7. Checks and Certificates in Different Name. If the check is to be made
payable to the order of, and the Certificate(s) for retained or non-cashed
shares is/are to be issued to, a person other than the person in whose name the
Certificate(s) submitted for exchange herewith is/are registered, such exchange
will not be made by the Exchange Agent unless the Certificate(s) submitted
is/are endorsed or in a form otherwise acceptable for transfer on the books of
ROHN, Box II is completed and the signature is guaranteed in Box IV by a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). In the event of a transfer of ownership of ROHN Common
Stock that is not registered in the transfer records of ROHN, the check may be
made payable to the order of, and a Certificate for retained or non-cashed
shares may be issued to, a person other than the person in whose name the
Certificate(s) so surrendered is/are registered only if the person requesting
such payment and issuance pays any transfer or other taxes required by reason
of such payment or issuance or establishes to the satisfaction of ROHN that
such tax has been paid or is not applicable.
8. Special Delivery Instructions. If the check and the Certificate(s) for
non-cashed or retained shares are to be sent to an address other than the
address of the registered holder set forth in Box I or, if Box II is completed,
to an address other than the address appearing in Box II, indicate such address
in Box III.
9. Miscellaneous. A single check and a single Certificate for retained and
non-cashed shares will be issued with respect to all shares of ROHN Common
Stock represented by the Certificate(s) surrendered with this Election Form to
the person(s) in whose name the Certificate(s) so surrendered is/are
registered, or to the person(s) designated in Box II, if applicable (See
Instruction D(7)).
The determination of the Exchange Agent whether or not Cash Elections have
been properly made or revoked and when Cash Elections and revocations were
received by it shall be binding. The Exchange Agent may, with the mutual
agreement of ROHN and PiRod, make such rules as are consistent with the Merger
Agreement for the implementation of the elections as shall be necessary and
desirable fully to effect such elections.
10. Stock Transfer Taxes. ROHN shall bear the liability for any stock
transfer taxes applicable to the issuance and delivery of checks and
Certificates in connection with the Merger; provided, however, that in the
event of a transfer of ownership of ROHN Common Stock that is not registered in
the transfer records of ROHN, the person requesting that a check be made
payable to the order of, and that a Certificate for retained or non-cashed
shares be issued to, a person other than the person in whose name the
Certificate(s) surrendered is/are registered shall pay the amount of any
transfer or other taxes required by reason of such payment and issuance to a
person other than the registered holder of such Certificate or establish to the
satisfaction of ROHN that such tax has been paid or is not applicable.
8
<PAGE>
11. Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
"backup withholding" provisions of Federal income tax law, the Exchange Agent
may be required to withhold 31% of the amount of cash that otherwise would be
delivered to holders of Certificates surrendered with this Election Form. To
prevent backup withholding, each holder should complete and sign the Substitute
Form W-9 included in this Election Form and either: (a) provide the correct
taxpayer identification number ("TIN") and certify, under penalties of perjury,
that the TIN provided is correct (or that such holder has applied for and is
awaiting a TIN), and that (i) the holder has not been notified by the Internal
Revenue Service ("IRS") that the holder is subject to backup withholding as a
result of failure to report all interest or dividends, or (ii) the IRS has
notified the holder that the holder is no longer subject to backup withholding;
or (b) provide an adequate basis for exemption. If the box in Part 3 of the
substitute Form W-9 is checked, the Exchange Agent will retain 31% of the
amount of cash that otherwise would be delivered to a holder during the 60 day
period following the date of the Substitute Form W- 9. If the holder furnishes
the Exchange Agent with such holder's TIN within 60 days of the date of the
Substitute Form W-9, the Exchange Agent will remit such amounts retained during
the 60 day period to the holder and no further amounts will be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with such holder's TIN within such 60 day
period, the Exchange Agent will remit such previously retained amounts to the
IRS as backup withholding and will withhold 31% of the amount of cash that
otherwise would be delivered to the holder thereafter until the holder
furnishes a TIN to the Exchange Agent. In general, if a holder is an
individual, the TIN is the Social Security Number of such individual. If the
Exchange Agent is not provided with the correct TIN or an adequate basis for
exemption, the holder may be subject to a $50 penalty imposed by the IRS and
backup withholding at a rate of 31%. Certain holders (including, among others,
all corporations and certain foreign individuals) are not subject to the backup
withholding and reporting requirements. In order to satisfy the Exchange Agent
that a foreign individual qualifies as an exempt recipient, such holder must
submit a statement (generally, IRS Form W-8), signed under penalties of
perjury, attesting to that individual's exempt status. A form for such
statements can be obtained from the Exchange Agent.
For further information concerning backup withholding and instructions for
completing the Substitute Form W-9 (including how to obtain a TIN if you do not
have one and how to complete the Substitute Form W-9 if ROHN Common Stock is
held in more than one name or is not in the name of the actual owner), consult
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause ROHN
Common Stock to be deemed invalidly tendered, but may require the Exchange
Agent to withhold 31% of the amount of cash that would otherwise be delivered
to the holder. Backup withholding is not an additional Federal income tax.
Rather, the Federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained by the ROHN
stockholder upon the filing of a U.S. Federal income tax return.
12. Additional Copies. Additional copies of this Election Form may be
obtained from the Transfer Agent at .
9
<PAGE>
Appendix B
ROHN INDUSTRIES, INC.
1999 STOCK OPTION PLAN
Section 1. Purpose. The purpose of the Rohn Industries, Inc. 1999 Stock
Option Plan (this "Plan") is to benefit Rohn Industries, Inc. (the "Company")
and its subsidiaries by offering certain present and future employees,
including officers, a favorable opportunity to become holders of stock in the
Company over a period of years, thereby giving them a stake in the growth and
prosperity of the Company and encouraging the continuance of their services
with the Company or its subsidiaries.
Section 2. Administration.
2.1 Committee. This Plan shall be administered by the Compensation Committee
(the "Committee") of the Board of Directors of the Company (the "Board"). The
Committee's interpretation and construction of any terms or provisions of this
Plan or any option issued hereunder, or of any rule or regulation adopted in
connection therewith, shall be conclusive and binding on all interested
parties, so long as such interpretation and construction with respect to
incentive stock options corresponds to the requirements of Section 422 of the
Internal Revenue Code, as amended (the "Code") and the regulations thereunder.
2.2 Grants to Section 16 Persons. For so long as the Company's Common Stock
is registered under Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Committee may not grant options to an officer
of the Company subject to Section 16 of the Exchange Act unless the grant is
(i) approved in advance by the Committee in accordance with the provisions of
Rule 16b-3(d)(1) under the Exchange Act (where the Committee is composed solely
of two or more non-employee directors who satisfy the requirements of Rule 16b-
3(b)(3) under the Exchange Act), (ii) approved in advance, or subsequently
ratified by the stockholders in accordance with the provisions of Rule 16b-
3(d)(2) under the Exchange Act or (iii) absent approval pursuant to clauses (i)
or (ii), no officer of the Company may sell shares received upon the exercise
of an option during the six-month period immediately following the grant of
such option.
2.3 Grants to Section 162(m) Officers. The Board may not grant options to an
officer subject to Section 162(m) of the Code unless the grant is approved by
the Committee where the Committee is composed of at least two "outside
directors" (as defined in the regulations promulgated under Section 162(m) of
the Code).
2.4 Section 16(b) Compliance and Bifurcation of Plan. It is the intention of
the Company that this Plan comply in all respects with Section 16(b) and Rule
16b-3 under the Exchange Act, to the extent applicable, and, if any Plan
provision is later found not to be in compliance with such Section or Rule, the
provision shall be deemed null and void, and the Plan shall be construed in
favor of its meeting the requirements of Section 16(b) and Rule 16b-3 under the
Exchange Act. Notwithstanding anything in the Plan to the contrary, the
Committee, in its absolute discretion, may bifurcate the Plan so as to limit
the use of any provision of the Plan to participants who are executive officers
or other persons subject to Section 16(b) of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to other
participants.
Section 3. Stock Subject to This Plan. The stock subject to this Plan shall
be the Company's common stock, par value $.01 per share (the "Common Stock"),
authorized but unissued or held in the Company's treasury or subsequently
acquired by the Company. Subject to adjustment as provided in Section 7 hereof,
the aggregate amount of Common Stock to be delivered upon the exercise of all
options granted under this Plan shall not exceed 2,500,000 shares as such
Common Stock was constituted on the effective date of this Plan. If any option
granted under this Plan shall expire, or be surrendered, exchanged for another
option, canceled or terminated for any reason without having been exercised in
full, the unpurchased shares subject thereto shall thereupon again be available
for purposes of this Plan, including for replacement options which may be
granted in exchange for such surrendered, canceled or terminated options.
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Section 4. Eligibility. An incentive stock option may be granted only to an
individual who, at the time the option is granted, is an employee of the
Company or any subsidiary. A nonqualified stock option may be granted to any
employee of the Company or any subsidiary, whether an individual or an entity.
Any party to whom an option is granted under this Plan shall be referred to
hereinafter as an "Optionee."
Section 5. Terms and Conditions of Options. Options granted under this Plan
shall contain such terms, conditions, limitations and restrictions as the
Committee shall deem advisable and which are not inconsistent with this Plan.
Notwithstanding the foregoing, options shall include or incorporate by
reference the following terms and conditions:
5.1 Number of Shares and Price. The maximum number of shares that may be
purchased pursuant to the exercise of each option and the price per share at
which such option is exercisable (the "exercise price") shall be as established
by the Committee, provided that the Committee shall act in good faith to
establish an exercise price which shall be not less than the fair market value
per share of the Common Stock at the time the option is granted with respect to
incentive stock options and not less than 85% of the fair market value per
share of the Common Stock at the time the option is granted with respect to
nonqualified stock options and also provided that, with respect to incentive
stock options granted to greater than 10% stockholders, the exercise price
shall be as required by Section 6. In addition, in any five-year period, no
individual may be granted options under the Plan to purchase more than
1,000,000 shares of Common Stock, subject to adjustment as set forth in Section
7.
5.2 Term and Maturity. Subject to the restrictions contained in Section 6
with respect to granting incentive stock options to greater than 10%
stockholders, the term of each incentive stock option shall be as established
by the Committee and, if not so established, shall be 10 years from the date it
is granted but in no event shall the term of any incentive stock option exceed
10 years. The term of each nonqualified stock option shall be as established by
the Committee and, if not so established, shall be 10 years from the date it is
granted. To ensure that the Company or its subsidiaries will achieve the
purpose and receive the benefits contemplated in this Plan, any option granted
to any Optionee hereunder shall, unless the condition of this sentence is
waived by resolution adopted by the Committee, be exercisable according to the
following schedule:
<TABLE>
<CAPTION>
Period of Optionee's
Continuous Employment
With the Company or Related
Corporation From the Date Portion of Total Option
the Option is Granted Which is Exercisable
--------------------------- -----------------------
<S> <C>
after 1 year 33 1/3%
after 2 years 66 2/3%
after 3 years 100 %
</TABLE>
5.3 Exercise. Subject to the vesting schedule described in Section 5.2
above, each option may be exercised in whole or in part; provided, however,
that no fewer than 100 shares (or the remaining shares then purchasable under
the option, if less than 100 shares) may be purchased upon any exercise of
option rights hereunder and that only whole shares will be issued pursuant to
the exercise of any option. Options shall be exercised by delivery to the
Company of notice of the number of shares with respect to which the option is
exercised, together with payment of the exercise price.
5.4 Payment of Exercise Price. Payment of the option exercise price shall be
made in full at the time the notice of exercise of the option is delivered to
the Company and shall be in cash, bank certified or cashier's check or personal
check (unless at the time of exercise the Committee in a particular case
determines not to accept a personal check) for the Common Stock being
purchased.
The Committee can determine at the time the option is granted for incentive
stock options, or at any time before exercise for nonqualified stock options,
that additional forms of payment will be permitted. To the extent permitted by
the Committee and applicable laws and regulations (including, but not limited
to, federal tax and securities laws and regulations and state corporate law),
an option may be exercised by:
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(a) delivery of shares of Common Stock held by an Optionee having a fair
market value equal to the exercise price, such fair market value to be
determined in good faith by the Committee;
(b) delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker, all in accordance with the
regulations of the Federal Reserve Board, to promptly deliver to the
Company the amount of sale or loan proceeds to pay the exercise price and
any federal, state or local withholding tax obligations that may arise in
connection with the exercise; provided, that the Committee, in its sole
discretion, may at any time determine that this subparagraph (b), to the
extent the instructions to the broker call for an immediate sale of the
shares, shall not be applicable to any Optionee whose employment with the
Company has terminated prior to the time of exercise; or
(c) delivery of a properly executed exercise notice together with
instructions to the Company to withhold from the shares that would
otherwise be issued upon exercise that number of shares having a fair
market value equal to the option exercise price.
5.5 Withholding Tax Requirement. The Company or any subsidiary shall have
the right to retain and withhold from any payment of cash or Common Stock under
the Plan the amount of taxes required by any government to be withheld or
otherwise deducted and paid with respect to such payment. At its discretion,
the Company may require an Optionee receiving shares of Common Stock to
reimburse the Company for any such taxes required to be withheld by the Company
and withhold such shares in whole or in part until the Company is so
reimbursed. In lieu thereof, the Company shall have the right to withhold from
any other cash amounts due or to become due from the Company to the Optionee an
amount equal to such taxes or retain and withhold a number of shares having a
market value not less than the amount of such taxes required to be withheld by
the Company to reimburse the Company for any such taxes and cancel (in whole or
in part) any such shares so withheld. If required by Section 16(b) of the
Exchange Act, the election to pay withholding taxes by delivery of shares held
by any person who at the time of exercise is subject to Section 16(b) of the
Exchange Act, shall be made either six months prior to the date the option
exercise becomes taxable or at such other times as the Company may determine as
necessary to comply with Section 16(b) of the Exchange Act.
5.6 Assignability and Transferability of Option. Options granted under this
Plan and the rights and privileges conferred hereby may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than (i) by will or by the applicable laws of descent and
distribution, (ii) pursuant to a property settlement in connection with a
divorce proceeding, or (iii) as otherwise determined by the Committee by
resolution. Any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of any option under this Plan or of any right or privilege conferred
hereby, contrary to the Code or to the provisions of this Plan, or the sale or
levy or any attachment or similar process upon the rights and privileges
conferred hereby shall be null and void. The designation by an Optionee of a
beneficiary does not, in and of itself, constitute an impermissible transfer
under this Section.
5.7 Termination of Employment. If the Optionee's employment with the Company
or any subsidiary ceases for any reason other than termination for cause, death
or total disability, and unless by its terms the option sooner terminates or
expires, then the Optionee may exercise, for an 18-month period (and, in the
case of incentive stock options, for a three-month period), that portion of the
Optionee's option which is exercisable at the time of such cessation, but the
Optionee's option shall terminate at the end of the 18-month period (three-
month period for incentive stock options) following such cessation as to all
shares for which it has not theretofore been exercised, unless such provision
is waived by resolution adopted by the Committee within 90 days of such
cessation.
If an Optionee is terminated for cause, any option granted hereunder shall
automatically terminate as of the first discovery by the Company of any reason
for termination for cause, and such Optionee shall thereupon have no right to
purchase any shares pursuant to such option. "Termination for cause" shall mean
dismissal for dishonesty, conviction or confession of a crime punishable by law
(except minor violations), fraud, misconduct or unauthorized disclosure of
confidential information. If an Optionee's employment with the Company or any
subsidiary is suspended pending an investigation of whether or not the Optionee
shall be
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<PAGE>
terminated for cause, all Optionee's rights under any option granted hereunder
likewise shall be suspended during the period of investigation.
If an Optionee's employment with the Company or any subsidiary ceases
because of a total disability, the Optionee's option shall not terminate until
the end of the 18-month period and, in the case of an incentive stock option,
shall not cease to be treated as an incentive stock option until the end of the
12-month period, following such cessation (unless by its terms it sooner
terminates and expires). As used in this Plan, the term "total disability"
refers to a mental or physical impairment of the Optionee which is expected to
result in death or which has lasted or is expected to last for a continuous
period of 12 months or more and which causes the Optionee to be unable, in the
opinion of the Company and two independent physicians, to perform his or her
duties for the Company and to be engaged in any substantial gainful activity.
Total disability shall be deemed to have occurred on the first day after the
Company and the two independent physicians have furnished their opinion of
total disability to the Committee.
For purposes of this Section 5.7, a transfer of employment between or among
the Company and/or any subsidiary shall not be deemed to constitute a cessation
of employment with the Company or any subsidiary. For purposes of this Section
5.7, with respect to incentive stock options, employment shall be deemed to
continue while the Optionee is on military leave, sick leave or other bona fide
leave of absence (as determined by the Committee). The foregoing
notwithstanding, employment shall not be deemed to continue beyond the first 90
days of such leave, unless the Optionee's reemployment rights are guaranteed by
statute or by contract.
5.8 Death of Optionee. If an Optionee dies while he or she is employed by
the Company or any subsidiary or within the 12-month period following cessation
of such employment, any option held by such Optionee to the extent that the
Optionee would have been entitled to exercise such option, may be exercised
within 12 months after his or her death by the personal representative of his
or her estate or by the person or persons to whom the Optionee's rights under
the option shall pass by will or by the applicable laws of descent and
distribution.
5.9 Status of Shareholder. Neither the Optionee nor any party to which the
Optionee's rights and privileges under the option may pass shall be, or have
any of the rights or privileges of, a shareholder of the Company with respect
to any of the shares issuable upon the exercise of any option granted under
this Plan unless and until such option has been exercised.
5.10 Continuation of Employment. Nothing in this Plan or in any option
granted pursuant to this Plan shall confer upon any Optionee any right to
continue in the employ of the Company or of a subsidiary, or to interfere in
any way with the right of the Company or of any such subsidiary to terminate
his or her employment with the Company at any time.
5.11 Modification and Amendment of Option. Subject to the requirements of
Code Section 422 with respect to incentive stock options and to the terms and
conditions and within the limitations of this Plan, the Committee may modify or
amend outstanding options granted under this Plan. The modification or
amendment of an outstanding option shall not, without the consent of the
Optionee, impair or diminish any of his or her rights or any of the obligations
of the Company under such option. Except as otherwise provided in this Plan, no
outstanding option shall be terminated without the consent of the Optionee.
Unless the Optionee agrees otherwise, any changes or adjustments made to
outstanding incentive stock options granted under this Plan shall be made in
such a manner so as not to constitute a "modification" as defined in Code
Section 424(h) and so as not to cause any incentive stock option issued
hereunder to fail to continue to qualify as an incentive stock option as
defined in Code Section 422(b).
5.12 Limitation on Value for Incentive Stock Options. As to all incentive
stock options granted under the terms of this Plan, to the extent that the
aggregate fair market value (determined at the time the incentive stock option
is granted) of the stock with respect to which incentive stock options are
exercisable for the first time by the Optionee during any calendar year (under
this Plan and all other incentive stock option
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<PAGE>
plans of the Company, a subsidiary or a predecessor corporation) exceeds
$100,000, such options shall be treated as nonqualified stock options. The
previous sentence shall not apply if the Code is amended or if the Internal
Revenue Service publicly rules, issues a private ruling to the Company, any
Optionee, or any legatee, personal representative or distributee of an Optionee
or issues regulations, changing or eliminating such annual limit, in which case
the limitation shall be that provided by the Code or the Internal Revenue
Service, as the case may be.
5.13 Valuation of Common Stock Received Upon Exercise
5.13.1 Exercise of Options Under Sections 5.4(a) and (c). The value of
Common Stock received by the Optionee from an exercise under Sections
5.4(a) and 5.4(c) hereof shall be the fair market value as determined by
the Committee, provided that, if the Common Stock is traded in a public
market, such valuation shall be the average of the high and low trading
prices or bid and asked prices, as applicable, of the Common Stock for the
date of receipt by the Company of the Optionee's delivery of shares under
Section 5.4(a) hereof or delivery of the exercise notice under Section
5.4(c) hereof.
5.13.2 Exercise of Option Under Section 5.4(b). The value of Common
Stock received by the Optionee from an exercise under Section 5.4(b) hereof
shall equal (a) in the case of the sale of the Common Stock received as a
result of the exercise by a broker on the date of receipt by the Company of
the Optionee's exercise notice, the sales price received for such shares;
and (b) in all other cases, the average of the high and low trading prices
or bid and asked prices, as applicable, of the Common Stock for the date of
receipt by the Company of the Optionee's exercise notice.
Section 6. Greater Than 10% Stockholders.
6.1 Exercise Price and Term of Incentive Stock Options. If incentive stock
options are granted under this Plan to employees who own more than 10% of the
total combined voting power of all classes of stock of the Company or any
subsidiary, the term of such incentive stock options shall not exceed five
years and the exercise price shall be not less than 110% of the fair market
value of the Common Stock at the time the incentive stock option is granted.
This provision shall control notwithstanding any contrary terms contained in
any other document. The term and exercise price limitations of this provision
shall be amended to conform to any change required by a change in the Code or
by a ruling or pronouncement of the Internal Revenue Service.
6.2 Attribution Rule. For purposes of Section 6.1, in determining stock
ownership, an employee shall be deemed to own the stock owned, directly or
indirectly, by or for his or her brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries. If an
employee or a person related to the employee owns an unexercised option or
warrant to purchase stock of the Company, the stock subject to that portion of
the option or warrant which is unexercised shall not be counted in determining
stock ownership. For purposes of this Section 6, stock owned by an employee
shall include all stock owned by him which is actually issued and outstanding
immediately before the grant of the incentive stock option to the employee.
Section 7. Adjustment.
7.1 Upon Changes in Capitalization. The aggregate number and class of shares
for which options may be granted under this Plan, the number and class of
shares covered by each outstanding option, and the exercise price per share
thereof (but not the total price), and each such option, shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a split-up or consolidation of shares or
any like capital adjustment, or the payment of any stock dividend.
7.2 Effect of Change in Control.
7.2.1 Any option previously granted to any Optionee who is an employee
of the Company or any subsidiary on the date of a "Change in Control" shall
be immediately exercisable in full on or after such
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<PAGE>
date during its term, without regard to any time of exercise established
under Section 5 hereof. "Change in Control" shall mean the occurrence, at
any time during the specified term of an option granted under the Plan, of
any of the following events:
(i) The acquisition, by a person or group of persons acting in
concert, of a beneficial ownership interest in the Company, resulting
in the total beneficial ownership of such persons or group of persons
equaling or exceeding 50% of the outstanding Common Stock; provided,
however, that no such person or group of persons shall be deemed to
beneficially own (i) any Common Stock acquired directly from the
Company or (ii) any Common Stock held by the Company or any subsidiary
or any employee benefit plan (or any related trust) of the Company or
its subsidiaries. The Change in Control shall be deemed to occur on the
date the beneficial ownership of the acquiring person or group of
persons first equals or exceeds 50% of the outstanding Common Stock.
(ii) A change, within any period of 24 months or less, in the
composition of the Board such that at the end of such period a majority
of the directors who are then serving were not serving at the beginning
of such period, unless at the end of such period the majority of the
directors in office were nominated upon the recommendation of a
majority of the Board at the beginning of such period. The Change in
Control shall be deemed to occur on the date the last director
necessary to result in a Change in Control takes office or resigns from
office, as applicable.
(iii) Approval by shareholders of the Company of a merger,
consolidation or other reorganization having substantially the same
effect, or the sale of all or substantially all the consolidated assets
of the Company in each case, with respect to which the persons or group
of persons who were the respective beneficial owners of the Common
Stock immediately prior to such event do not, following such event,
beneficially own, directly or indirectly, more than 50% of the then
outstanding voting securities of the Company resulting from such event
or the Company purchasing or receiving assets pursuant to such event.
If more than one of the foregoing events shall occur, each such event
shall constitute a separate Change in Control.
7.2.2 Notwithstanding any other provisions in the Plan, prior to the
passage of one year from and after any Change in Control, each Optionee
shall have the right to require the Company (or, if the Company is not the
survivor of a merger, consolidation or reorganization with an acquiror, the
acquiror) to purchase from him or her any or all unexercised options
granted under this Plan at a purchase price equal to (i) the excess of the
fair market value per share over the exercise price multiplied by (ii) the
number of option shares specified by the Optionee for purchase in a written
notice to the Company (or, if the Company is not the survivor of a merger,
consolidation or reorganization with an acquiror, the acquiror), attention
of the Secretary.
7.2.3 For purposes of Section 7.2.2 above, "fair market value per share"
shall mean, (i) except in the case of a merger, consolidation or
reorganization with an acquiror in which the Company is not the survivor (a
"Termination Merger"), the higher of (A) the average of the highest sales
price per share of the Company's Common Stock on the NASDAQ Stock Market
(as reported in The Wall Street Journal, Midwest Edition) (or, if the
Company's Common Stock is not then traded on the NASDAQ Stock market, on
the principal market where such Common Stock is actively traded) on each of
the five trading days immediately preceding the date the Optionee so
notifies the Company or (B) the average of the highest sales price per
share of the Company's Common Stock on the NASDAQ Stock Market (as reported
in The Wall Street Journal, Midwest Edition) (or, if the Company's Common
Stock is not then traded on the NASDAQ Stock Market, reported on the
principal market where such Common Stock is actively traded) on each of the
five trading days immediately preceding the date of the Change in Control,
and (ii) in the case of a Termination Merger, the higher of (C) the fair
market value of the consideration receivable per share by holders of Common
Stock in such Termination Merger, which fair market value as to any
securities included in such consideration shall be the average of the
highest sales price per unit of such security on the NASDAQ Stock Market
(as reported in The Wall Street Journal, Midwest Edition) (or, if
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<PAGE>
such security is not then traded on the NASDAQ Stock Market, reported on
the principal market where such security is actively traded) on each of the
five trading days immediately preceding the date of the Termination Merger
and as to any such security not actively traded in any market and as to all
other property included in such consideration, shall be the amount
determined by the Committee in its discretion or (D) the amount determined
pursuant to Clause (i)(B) of this Section 7.2.3. The amount payable to each
Optionee by the Company or acquiror, as the case may be, shall be in cash
or by certified check and shall be reduced by any taxes required to be
withheld.
7.3 Fractional Shares. In the event of any adjustment in the number of
shares covered by an option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the
number of full shares resulting from such adjustment.
7.4 Determination of Committee to Be Final. All Section 7 adjustments shall
be made by the Committee, and its determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. Unless an
Optionee agrees otherwise, any change or adjustment to an incentive stock
option shall be made in such a manner so as not to constitute a "modification"
as defined in Code Section 424(h) and so as not to cause his or her incentive
stock option issued hereunder to fail to continue to qualify as an incentive
stock option as defined in Code Section 422(b).
Section 8. Securities Regulation. Shares shall not be issued with respect to
an option granted under this Plan unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the Exchange Act, the
rules and regulations promulgated thereunder, and the requirements of any stock
exchange or inter-dealer quotation system upon which the shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance, including the availability of an exemption
from registration for the issuance and sale of any shares hereunder. Inability
of the Company to obtain from any regulatory body having jurisdiction the
authority deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any shares hereunder or the unavailability of an exemption
from registration for the issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been obtained.
As a condition to the exercise of an option, the Company may require the
Optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present
intention to sell or distribute such shares if, in the opinion of counsel for
the Company, such representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order
against any shares of stock may be placed on the official stock books and
records of the Company, and a legend indicating that the stock may not be
pledged, sold or otherwise transferred unless an opinion of counsel is provided
(concurred in by counsel for the Company) stating that such transfer is not in
violation of any applicable law or regulation, may be stamped on stock
certificates in order to assure exemption from registration. The Company may
also require such other action or agreement by the Optionees as it may from
time to time deem to be necessary or advisable. THE COMPANY SHALL NOT BE
OBLIGATED, BY REASON OF THIS PROVISION OR OTHERWISE, TO UNDERTAKE REGISTRATION
OF THE OPTIONS OR STOCK HEREUNDER.
Should any of the Company's capital stock of the same class as the stock
subject to options granted hereunder be listed on a national securities
exchange or inter-dealer quotation system, shares shall not be issued with
respect to an option granted this Plan unless, prior to issuance, such exchange
or inter-dealer quotation system shall have authorized the listing of the
shares thereon.
Section 9. Amendment and Termination.
9.1 Board Action. The Board may at any time suspend, amend or terminate this
Plan, provided that except as set forth in Section 7, the approval of the
holders of a majority of the Company's outstanding shares
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<PAGE>
of voting capital stock present and entitled to vote at any meeting is
necessary for the adoption by the Board of any amendment which will:
(a) increase the number of shares which are to be reserved for the
issuance of options under this Plan;
(b) permit the granting of stock options to a class of persons other
than those currently permitted to receive stock options under this Plan; or
(c) require shareholder approval under applicable law, including Section
16(b) of the Exchange Act.
9.2 Automatic Termination. Unless sooner terminated by the Board, this Plan
shall terminate ten years from the earlier of (a) the date on which this Plan
is adopted by the Board or (b) the date on which this Plan is approved by the
stockholders of the Company. No option may be granted after such termination
or during any suspension of this Plan. The amendment or termination of this
Plan shall not, without the consent of the option holder, alter or impair any
rights or obligations under any option theretofore granted under this Plan.
Section 10 Effectiveness Of This Plan. This Plan shall become effective
upon adoption by the Board so long as it is approved by the holders of a
majority of the Company's outstanding shares of voting capital stock present
and entitled to vote at any meeting at any time within 12 months before or
after the adoption of this Plan. Options may be granted hereunder prior to
such stockholder approval, but subject thereto.
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